Central Bank Raised the Key Rate to 7.5 Percent per Annum
According to the Central Bank, inflation is currently developing significantly higher than the forecast and by the end of the year should be 7.4-7.9 percent. “The contribution to inflation from the side of stable factors remains significant due to the faster expansion of demand compared to the possibilities of increasing output. In these conditions and taking into account the newly increased inflationary expectations, the balance of risks for inflation is significantly shifted towards pro-inflationary ones, ”the message says.
The current increase was the sixth in a row since March, when the rate was at the lowest level in recent Russian history - 4.25 percent per annum. At the March meeting, the cycle of monetary policy easing, which began in the summer of 2019, was completed. The current level is the highest since 2018.
Most economists predicted a 0.5 percentage point increase in the rate. They justified their assumptions by the need to respond to price increases, which have recently been recorded for many categories of goods and services.
General consumer inflation in September accelerated from 6.7 to 7.4 percent compared to the same period last year. Food products rose in price by 9.2 percent, non-food products - by eight percent. At the same time, the Central Bank is guided by a target inflation rate (the so-called target) of four percent per annum, and the key rate (together with the rate of required bank reserves) is one of the main instruments of monetary policy.