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MOSCOW, June 7On Friday, the Bank of Russia will choose between raising the key rate by 1 percentage point, to 17%, and maintaining it at the current level, according to surveyed analysts, and their opinions on this matter were almost equally divided.
Rate dynamics and signal
In July 2023, the Central Bank began raising the key rate to combat accelerating inflation — at first by only 1 percentage point, but within a month, In August, the regulator, against the backdrop of the falling ruble exchange rate, sharply increased the rate at an extraordinary meeting — by 3.5 percentage points. In the fall, the Central Bank added 3 percentage points, and in December — another 1 percentage point, bringing the figure to 16%. 
At all three previous meetings of this year in February, March and April, the Central Bank of the Russian Federation left the rate unchanged. However, following the results of the April meeting, the regulator toughened the signal, pointing to a longer period of maintaining tight monetary conditions in the economy.
Weekly inflation in Russia in annual terms as of June 3 accelerated to 8.17% from 8.07% on May 27, the Ministry of Economic Development reported. And Russians’ inflation expectations for the year ahead rose to 11.7% in May from 11% a month earlier, according to an InFOM study commissioned by the Bank of Russia. Before that — from December last year to April this year — they were declining.
In May, Deputy Chairman of the Central Bank Alexey Zabotkin said that the regulator sees strengthening arguments in favor of maintaining the degree of tightness of monetary policy for a long time. He also noted that the Central Bank plans to substantively consider an alternative scenario, which involves increasing the key rate, at a meeting of the board of directors in June.
For promotion
“We expect that the Bank of Russia will choose between raising the key rate by 100 basis points, to 17%, and maintaining it at the current level of 16%,” said Mikhail Vasiliev, chief analyst at Sovcombank. 
At the same time, the probability of a rate increase, according to him, is approximately 60%, while the probability of maintaining it is 40%. “If the Central Bank keeps the rate at 16% in June, then we expect the rate to rise to 17% at the next meeting on July 26,” Vasiliev added.
The predominance of pro-inflationary risks due to high demand for goods and services speaks in favor of increasing the key rate, notes Maxim Timoshenko, director of the department of operations in financial markets of Russian Standard Bank. The NRA also expects the key rate to rise to 17% as accelerating price growth is seen as a threat to financial stability.
The chief economist of the Expert RA rating agency, Anton Tabakh, believes that there are arguments for both maintaining the rate and increasing it, and an increase of more than 100 basis points may be on the table. “The market in the “week of silence” has already included a “key” of 17% in rates and rates. But with this configuration, the rate will remain this way for a relatively short time and a decrease can be expected in the fourth quarter,” he added.
It’s too early to increase
«We expect that the Bank of Russia at the next meeting of the board of directors will consider two options: maintaining the key rate at 16% and increasing it to 17% “It seems most likely to us that it will remain at its current level,” said Rodion Latypov, chief economist of the VTB Group. 
Chief economist at BCS World of Investments Ilya Fedorov also expects that the Central Bank will maintain the rate at the meeting on June 7: the picture of what is happening remains incomplete, and analysts see the rate change as premature. At the same time, he pointed out that it is becoming increasingly difficult for the regulator to remain in a wait-and-see position: inflation exceeds 8%, and banks are raising deposit rates.
It is most likely that the key rate will be maintained at 16% with a simultaneous tightening of rhetoric, says Maxim Osadchiy, head of the analytical department of BKF Bank. He called it less likely that the key rate would be raised to 17% and does not expect a more significant increase in its level.
«I expect the key rate to remain at 16%, despite the increase in weekly inflation. The current acceleration of inflation is due to short-term and one-time factors (increased transport tariffs, seasonal increases in prices for some food products and tourist services, and so on)», — said PSB chief analyst Denis Popov, who predicts a gradual slowdown in inflation from July.