MOSCOW, April 26. /TASS/. The Bank of Russia has decided to keep the key rate at 16% per annum again.
"On April 26, 2024, the Bank of Russia Board of Directors decided to keep the key rate at 16% per annum. The return of inflation to target and its further stabilization close to 4% assume that tight monetary conditions will be maintained in the economy for a longer period than previously forecast," the regulator said in a press release.
The balance of inflation risks remains tilted to the upside over the medium term, the Central Bank reported, adding that the main proinflationary risks are associated with changes in terms of trade and persistently high inflation expectations.
"Over the medium term, the balance of inflation risks is still tilted to the upside. The main proinflationary risks are associated with changes in terms of trade (including as a result of the geopolitical tensions), persistently high inflation expectations and upward deviation of the Russian economy from a balanced growth path, as well as with the fiscal policy normalization path," the press release said.
Disinflationary risks are primarily related to a faster slowdown in domestic demand than expected in the baseline scenario, the regulator added.
The Central Bank has upgraded its outlook on the average key rate to 15-16% for 2024(up from 13.5-15.5% previously), and to 10-12% for 2025 (up from 8-10%), according to files released by the regulator. The outlook on the average key rate for 2026 remained unchanged at 6-7%.
The Bank of Russia has upgraded its outlook on GDP growth for 2024 to 2.5-3.5%. Previously the regulator expected economic growth within 1-2% this year. "High-frequency indicators show that, in 2024 Q1, the Russian economy continued to grow notably faster than forecast. Consumer activity remains high amid a significant increase in households’ incomes and positive consumer sentiment. According to companies’ surveys, investment demand remains high. The Russian economy still shows a significant upward deviation from a balanced growth path. The GDP growth forecast for 2024 has been raised to 2.5-3.5%," the press release said.
The regulator expects annual inflation to return to the targeted level of 4% in 2025, and to total 4.3-4.8% by the end of this year. "The Bank of Russia’s monetary policy is set to solidify disinflation processes unfolding in the national economy. According to the Bank of Russia’s forecast and given the monetary policy stance, annual inflation will decline to 4.3-4.8% in 2024 and return to 4% in 2025," the regulator said.
In March, current seasonally adjusted price growth was down to 4.5% in annualized terms (from 6.3% in February), Central Bank added. "This decline was largely caused by volatile components. Underlying inflationary pressures have also decreased but remain high due to strong growth in domestic demand. Annual inflation did not change significantly since the beginning of March and, as of April 22, amounted to 7.8%," the press release said.
The Bank of Russia has upgraded its outlook on the Brent oil price to $85 from $80 per barrel for 2024, and to $80 from $75 per barrel for 2025. The outlook for 2026 remained intact at $70 per barrel.