Russia’s cbank keeps key rate at 9% amid inflation risks

MOSCOW, Jul 28 (PRIME) -- The board of directors of Russia’s central bank has kept the key rate at 9% annually, as short-term and medium-term inflation risks remain, the regulator said on Friday.

“Inflation remains around the targeted level, and economic activity continues to recover. At the same time, short-term and medium-term inflationary risks remain,” the bank said.

Inflation reaching 4.4% in June was caused by dynamics of fruit and vegetable prices amid unfavorable weather conditions, but a tendency to stable low inflation continues, the regulator said. Prices for other food products continued slowing.

The ruble’s depreciation in June–July did not have a significant impact on annual inflation.

Economic activity continues recovering, and the gross domestic product (GDP) growth is expected at 1.3–1.8% in 2017.

“Short-term inflationary risks connected with the expected harvest, its influence on food products’ prices and inflationary expectations remain. Moreover, currency and inflationary expectations could be negatively affected by volatility of global commodities and financial markets, as well as ruble rates fluctuations amid higher geopolitical risks,” the central bank said.

The regulator said it will keep moderately tight monetary policy for a long time to support inflation around the target level of 4%.

The central bank will hold a next meeting to consider its key rate on September 15.

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