Russia’s central bank keeps key rate at 10% annually

MOSCOW, Oct 28 (PRIME) -- The Russian central bank has kept its key rate unchanged at 10% annually, as inflation risks remain, the regulator said in a press release Friday.

Annual inflation slowed to 6.2% as of Monday from 6.4% in September, but this is mainly caused by temporary factors, the central bank said.

“Taking into account the decision made and the remaining moderately tight monetary policy, under the central bank’s forecast, annual inflation will be less than 4.5% in October 2017 and will further decrease to the target of 4% at the end of 2017,” it said.

However, risks that inflation will not reach the target of 4% in 2017 still remain, the regulator said.

The central bank expects small quarterly growth of gross domestic product (GDP) in October–December and contraction of 0.5–0.7% for the entire year. In 2017, the Russian economy will grow by less than 1%.

The central bank believes it is necessary to keep the key rate at the current level until the end of the year to ensure stable reduction of inflation. The regulator will hold a next meeting of the board of directors to consider the key rate on December 16.

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