Central bank says keeps key rate at 7.5% for 6th time
MOSCOW, Jun 9 (PRIME) – The central bank has kept the key rate at 7.5% annually for the sixth time in a row but made a more hawkish signal of further actions than at the previous meeting, the authority said on Friday.
"The current rate of price growth, including the stable figures, continues to increase. Inflationary expectations of the population and price expectations of companies remain elevated,” the central bank said.
“Acceleration of budget spending, deterioration of the foreign trade conditions and the labor market situation are still forming pro-inflationary risks. The balance of risks has become increasingly skewed towards pro-inflationary."
The bank said it did not rule out a key rate rise at the next meetings "in conditions of a gradual rise of the current inflation pressure."
Inflation stood at 2.6% annually as of Monday after 2.3% in April and is forecasted at 4.5–6.5% in 2023 and near 4% in 2024 and further on.
Stronger foreign trade and financial restrictions may have a pro-inflationary effect by changing the currency rates. More complex production and logistic chains can lead to an imports price rise. A significant lack of labor force, high and unanchored inflation expectations and an accelerating lending rates pose an increasing inflation risk. Deterioration of the global economic growth prospects can have significant short-term pro-inflationary effects.
The current price increase amounts to about 4% on the year with the stable component rising and approaching 4% on the year. Recovering consumer demand and a gradual translation of ruble weakening since the start of 2023 into a price rise mean that a wider range of goods and services are under rising inflation pressure.
Inflationary expectations of companies vary with that in agriculture declining, and in trade and processing growing.
Economic activity outpaced the April forecast thanks to active demand recovery.
The monetary conditions eased slightly in the reporting period, while the loan and deposit rates remained almost unchanged.
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