MOSCOW, October 6. /TASS/. A dramatic increase of the key rate by 300 basis points at once (from 19% to 22% per annum) might lead to rising volatility in financial markets, the Bank of Russia said in the summary of key rate discussions.
"Participants in the discussion suggesting the increase by 300 basis points said that it would make possible to lower inflation quicker and provide insurance for the case of materialization of new pro-inflationary risks that remain high. It will also help to lower inflation expectations with greater confidence. However, the majority of discussion participants agree that the dramatic rate change may lead to growing volatility in financial markets. Therefore, choosing the step increment requires to exercise great caution," the regulator informed.
The Board of Directors of the Bank of Russia made the decision at the meeting in October to increase the key rate by 200 basis points to record high 21% per annum, noting that inflation evolves much higher than the July forecast of the Central Bank and inflation expectations of households are at their highest since the year start.