MOSCOW, November 16. /TASS/. The Bank of Russia will be ready to reduce the key rate as early as 2024, when annual inflation approaches the target of 4%, Governor of the Bank of Russia Elvira Nabiullina said on Thursday.

"Our baseline scenario shows that inflation will return to the target of 4% next year, and we will be able to start reducing the key rate accordingly. But in order for the inflation to slow down, for the economy to digest the record amount of credit that has already been created in 12 months, the key rate will remain high for some time. But I want to assure you that this is the guarantee to normal, stable development in the future," she said.

According to Nabiullina, the regulator was forced to raise the key rate in order to avoid losses for people, companies, and the government. "We recognize that many people are anxious about key rate hikes. But believe me, all calculations and all of our experience show that if we had not done this, if we had not reacted in time, there would have been losses for people, businesses, and the state," she said.

The Bank of Russia began a cycle of hiking the key rate in July 2023. After a lengthy wait, the regulator increased it by one percentage point (pp) to 8.5% per year. At an unplanned meeting in August, the key rate was raised by 3.5 pp, to 12%. The key rate was raised again by 1 pp to 13% in September. The rate was set at 15% in October, after the regulator noted a significant increase in current inflationary pressures.

In addition, the Bank of Russia increased its inflation prediction for 2023 from 6-7% to 7-7.5% in October. Taking current monetary policy into consideration, the regulator expects that annual inflation will fall to 4-4.5% in 2024 and continue close to 4% in the future.