To maintain the key rate at a high level, the regulator needs quite a long time, but it will begin to decline in 2024, although later than the regulator previously planned. At the same time, the forecast for the average key rate for 2024 was raised to 12.5%-13.5%. The decrease in this parameter will occur smoothly. At the same time, a high rate will not lead to a recession in the Russian economy. Chairman of the Bank of Russia Elvira Nabiullina announced this on Friday, February 16, during a press conference following a meeting of the regulator’s Board of Directors, at which it was decided to maintain the key rate at 16%. This is the first time the Central Bank has taken a break in the tightening cycle of this indicator, which began in July last year.
“We will consistently reduce the rate, the size of the steps will be determined by our expectations of a slowdown in inflation and the state of information expectations (…). Our basic forecast does not assume a recession,” the head of the Central Bank of the Russian Federation emphasized.
Formerly First Deputy Chairman of the Bank of Russia Alexey Zabotkin in an interview with the NTV television channel said that the reduction of the key rate will begin in 2024. He recalled that the October forecast assumes that the average level of the key rate from January to December this year will fluctuate between 12.5%, which means that “at some point” the rate will begin to decline. The Deputy Chairman of the Central Bank of the Russian Federation emphasized that the economy needs from 3 to 6 quarters for the regulator’s decision to fully affect price dynamics and for inflation to slow down. Let us recall that the target for the Bank of Russia is to achieve inflation of 4%. According to the Ministry of Economic Development, annual inflation in Russia from February 6 to 12, 2024 reached 7.57%, and a week earlier it was 7.27%.