Bank of Russia: Key Rate Remains at 7.75% p.a.

11 February 2019 (09:32)

UrBC, Moscow, February 11, 2019. The Bank of Russia decided to keep the key rate at 7.75% per annum, the bank’s official website states.

The Board of Directors’ meeting took place on February 8, 2019.

The bank reports that the annual inflation rate remained within the lower end of the expected range in January 2019. At the same time, both households’ and businesses’ inflation expectations were on the rise. The 2% increase in the VAT proved only a moderate contributing factor in the growing consumer prices last month.

‘The effect of the VAT increase on inflation can be fully assessed no sooner than this April. There persists uncertainty over future external conditions and certain food price dynamics. The balance of risks remains skewed towards pro-inflationary risks, especially over a short-term horizon. Given the decision taken, the Bank of Russia forecasts annual inflation to range between 5.0 and 5.5% by the end of 2019 and return to 4% in the first half of 2020,’ the Bank’s press release says.

‘In its key rate decision-making, the Bank of Russia will determine if the increases of the key rate in September and December 2018 were sufficient to bring annual inflation back to the target in 2020, taking into account inflation and economic performance against the forecast, as well as the risks associated with external conditions and financial markets’ response to them.’

The next key rate-related BOD meeting has been scheduled for March 22, 2019.

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