Central bank says keeps key rate at 7.75% annually

MOSCOW, Feb 8 (PRIME) -- Russia’s central bank has kept its key rate at 7.75% annually and maintained its economic growth forecast for 2019 at 1.2-1.7%, the regulator said on Friday.

In January, Russia’s inflation was in line with the lower bracket of central bank’s expectations, with growth of consumer prices accelerating to 5.0% from 4.3% in December 2018, the regulator said.

The central bank believes annual inflation will accelerate further reaching its peak in January–June due to an increase in value-added tax (VAT) and the ruble’s depreciation in 2018 to amount to 5.0–5.5% as of the end of 2019. Quarterly growth of consumer prices will slow to 4% already in the second half of 2019. Annual inflation will return to 4% in the first half of 2020 when effects of the ruble’s depreciation and the VAT increase are depleted, the regulator said.

In 2018, GDP grew by 2.3%, according to the Federal State Statistics Service, above the central bank’s forecast of 1.5–2%.

The central bank will make decisions on the key rate, assessing adequacy of the key rate increase in September and December 2018 to return annual inflation to the target in 2020, taking into account inflation and economic growth relative to the forecast, as well as risks from external conditions and financial markets’ reaction to them.

The next meeting of the central bank’s board of directors on the key rate issue is scheduled for March 22.

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