Russia’s central bank keeps key rate at 7.25% annually

MOSCOW, Jun 15 (PRIME) -- The board of directors of Russia’s central bank has decided to keep its key rate at 7.25% annually, the regulator said on Friday.

Inflationary expectations of the population and enterprises have slightly increased, which is first of all connected with higher gasoline prices, the regulator said. The ruble’s weakening in April indicates a moderate impact on dynamics of inflation and inflationary expectations.

The planned tax changes will speed up inflation by around 1 percentage point, the regulator said.

The central bank expects annual inflation at 3.5–4% in late 2018 and its short-term rise to 4–4.5% in 2019. Inflation will return to 4% by the start of 2020.

The central bank has retained its forecast for Russia’s gross domestic product (GDP) growth at 1.5–2% in 2018 and expects that economic growth will remain around these levels in 2019–2020.

In January–March, Russia’s GDP grew 1.3% on the year, which is slightly below the March forecast. “This is connected with a slower than expected increase of investments in main capital, including with a lower volume of construction works, as well as with the revision of 2017 data by the Federal State Statistics Service,” the bank said.

The regulator will make decisions over its key rate taking into account inflationary risks, inflation dynamics and economic development. The next meeting on the issue is scheduled for July 27.

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