MOSCOW, July 26. /TASS/. The balance of inflation risks in Russia remains tilted to the upside over the mid-term horizon, with key proinflationary risks associated with change in terms of trade and persistently high inflation expectations, the Bank of Russia said in a press release.

"Over the medium-term horizon, the balance of inflation risks is still tilted to the upside. The key proinflationary risks are associated with changes in terms of trade (including as a result of geopolitical tensions), persistently high inflation expectations and an upward deviation of the Russian economy from the balanced growth path," the regulator said.

Disinflationary risks are primarily related to a faster slowdown in domestic demand growth than expected in the baseline scenario, according to the press release.

The Bank of Russia assumes that the announced fiscal policy normalization path in 2024 and further on will remain unchanged. Changes in this path may require a revision of the monetary policy parameters, the regulator said.

Earlier on Friday the board of directors of the Bank of Russia decided to increase the key rate for the first time since December 2023 - by 200 basis points to 18% per annum, saying that inflation has accelerated and is developing significantly above the regulator’s April forecast. The Bank of Russia noted that it would consider the necessity of further key rate increase at its upcoming meetings.