Russian cbank retains key rate at 7.5% as market stabilizes

MOSCOW, Oct 26 (PRIME) -- The board of directors of the Russian central bank decided to keep the key rate at 7.5% at a meeting on Friday, the authority said in a statement.

The situation on the domestic financial market has stabilized as compared with the September situation due to calming of the ruble volatility.

Pro-inflation risks remained prominent, most of all in the short term.

Inflation amounted to 3.5% as of October 22 with the growth attributable to a food price increase in September and price adjustments to weakening of the ruble.

Inflation expectations of companies were elevated due to weakening of the ruble and a forthcoming increase of value-added tax (VAT). People’s expectations fell in October but remained higher as compared with the average figures in January–June.

The central bank forecasts inflation to amount to 3.8–4.2% at the end of 2018, to peak in January–June, 2019 and to recede to 5.0–5.5% at the end of 2019. Quarterly inflation will amount to 4% in July–December 2019 and annual inflation will return to 4% by January–June 2020.

Uncertainty over external conditions in the future remained.

The economy is rising at a close to full capacity pace. The gross domestic product (GDP) growth forecast is 1.5–2.0% for 2018 and 1.2–1.7% in 2019.

In September, industrial production increased unevenly, consumer demand rose at a moderate pace, investment activity increased in July–September.

End