MOSCOW, June 7. /TASS/. The key rate of 16% is not holding back economic growth in the country, head of the Bank of Russia, Elvira Nabiullina, said at a press conference.

"We cannot say that the 16% rate is now holding back economic growth. But high inflation associated with overheating, if we allow it to take root, it will have strong negative consequences both for citizens and for the prospects for future economic growth," she said.

Earlier on Friday, the Bank of Russia repeatedly kept its key rate at 16% per annum. The regulator also announced that it holds open the prospect of increasing it at the upcoming meeting. Returning inflation to the target will require a significantly longer period of maintaining tight monetary conditions in the economy than it was forecast in April, the regulator said.

The Russian economy still shows a significant upward deviation from a balanced growth path, the regulator noted. Consumer activity remains high amid a significant increase in households’ incomes and positive consumer sentiment. According to companies’ surveys, investment demand remains high. Labor shortages come as the key constraint on the expansion of output of goods and services. Labor market tightness continues to grow. Unemployment has dropped to a new historical low.