The Central Bank noted that the Russian and world economies are recovering faster than previously expected, and inflation is higher than forecasted.
“The contribution to inflation from stable factors is increasing due to the faster expansion of demand compared to the possibilities of increasing output. In the short term, this influence is intensified by the rise in prices on world commodity markets, ”the statement says.
The regulator warned that the increased inflationary pressure in the context of the final economic recovery “creates the need for a further increase in the key rate at the next meetings.”
The next meeting of the Board of Directors of the Bank of Russia, which will consider the issue of the key rate level, is scheduled for July 23.
Since April 2020, the Bank of Russia has consistently reduced its key rate from 6% to 4.25%, thus reaching a historic low. In March 2021, the Bank of Russia raised its key rate to 4.5%. On April 23, it was announced that the key rate was immediately raised by 0.5 percentage points, to 5% per annum. Then the Central Bank explained that they decided to return to “neutral monetary policy”, since “the growth rates of consumer prices and inflationary expectations of the population and business remain elevated.”