MOSCOW, February 16. /TASS/. The Bank of Russia decided to maintain the key rate at 16% per annum at its first meeting in 2024, indicating that it is too early to judge the sustainability of the emerging disinflationary trends.
"On 16 February 2024, the Bank of Russia Board of Directors decided to keep the key rate at 16.00% per annum. Current inflationary pressures have eased compared with the autumn months but remain high. Domestic demand is still outstripping the capabilities to expand the production of goods and services. A judgement on the sustainable nature of emerging disinflationary trends would be premature. The Bank of Russia’s monetary policy is set to solidify disinflation processes unfolding in the national economy," the regulator said.
At the same time, the Bank of Russia raised its forecast for the average key rate for 2024 from 12.5-14.5% to 13.5-15.5%. In 2025, the rate is expected to be 8-10%, against the previous forecast of 7-9%, the forecast for 2026 reached 6-7%.
The Bank of Russia raised its forecast for Russian economic growth in 2024 from 0.5-1.5% to 1-2%. At the end of 2023, the country’s GDP grew by 3.6%, which is higher than the regulator’s forecasts. For 2025 and 2026, the regulator maintained its GDP growth forecast at 1-2% and 1.5-2.5%, respectively.
It was noted that the growth of the Russian economy in 2023 was higher than the regulator previously predicted. "The Russian economy grew at an annual rate of 3.6% in 2023, exceeding the Bank of Russia’s previous forecast. Given increased inflationary pressures, this means that domestic demand is still considerably outstripping the capabilities to expand the production of goods and services. At the same time, a growing propensity of households to save, a deceleration in consumer activity growth, and cooling demand for imports are increasingly working to put the economy back on a balanced growth path. This is set to be a protracted process," the regulator said.
The Bank of Russia added that "The return of inflation to target in 2024 and its further stabilisation close to 4% assume that tight monetary conditions will be maintained in the economy for a long period. According to the Bank of Russia’s forecast and given the monetary policy stance, annual inflation will decline to 4.0-4.5% in 2024 and will stabilise close to 4% further on."
The Bank of Russia will hold its next key rate review meeting on March 22, 2024.