MOSCOW, July 26. /TASS/. The scale of overheating of the Russian economy in the first half of 2024 was the largest over the past 16 years, Central Bank Governor Elvira Nabiullina told a press conference following the meeting of the board of directors on the key rate.
"We believe indeed that the economy is overheated. <…> Estimating the degree of overheating we look at a wide range of indicators. Among the main of them are unemployment, growth rates of real wages, lending dynamics. The key indicator is inflation," she said, adding that "in the first half of the year the scale of overheating was the largest over the past 16 years."
Overheating or positive output gap is the state of economy when output volume exceeds the so-called potential GDP, Nabiullina said. "Our monetary policy is aimed at making sure than this output gap contracts and the economy shifts to balanced growth rates," she noted.
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.