MOSCOW, October 27. /TASS/. Current data for the Q3 of 2023 show that Russian economic activity is growing faster than the Bank of Russia predicted in September. According to a press release issued by the regulator following its Board of Directors meeting, this trend increases persistent inflationary pressure in the economy.
"Current data for the third quarter show that economic activity is expanding faster than the Bank of Russia anticipated in September. In times of high domestic demand, the Russian economy's upward deviation from a balanced growth trajectory is increasing. This in turn increases persistent inflationary pressure in the economy," the statement said.
The Bank of Russia earlier raised the key rate by 2 percentage points (pp) to 15% per annum, indicating a significant increase in current inflation pressure. "On 27 October 2023, the Bank of Russia Board of Directors decided to increase the key rate by 200 basis points to 15.00% per annum. Current inflationary pressures have significantly increased to a level above the Bank of Russia’s expectations. Steadily rising domestic demand is increasingly exceeding the capabilities to expand the production of goods and the provision of services. Inflation expectations remain elevated," the regulator said.
The regulator also raised its inflation forecast for 2023 to 7-7.5% from 6-7% and adjusted it for 2024, expecting inflation in the range of 4-4.5%. "In its further key rate decision-making, the Bank of Russia will take into account actual and expected inflation dynamics relative to the target and economic developments over the forecast horizon, as well as the risks posed by domestic and external conditions and the reaction of financial markets. According to the updated forecast of the Bank of Russia, annual inflation will range from 7.0 to 7.5% in 2023. Given the current monetary policy stance, annual inflation will decline to 4-4.5% in 2024 and stay close to 4% further on," the statement said.