The Bank of Russia raised the key rate to 5.5%

The Central Bank of Russia on Friday, June 11, raised the discount rate by 0.5 percentage points, to 5.5% per annum, reports the press service of the regulator. Thus, the rate returned to the level that was observed in April-June 2020.

‘On June 11, 2021, the Board of Directors of the Bank of Russia decided to raise the key rate by 50 bps, to 5.50% per annum,’ the statement reads.

The last time the regulator raised the key rate on April 23 this year, by 0.5 percentage points - to 5% per annum.

Experts interviewed by RIA Novosti expected that the regulator, against the background of the annual inflation accelerated to the maximum since 2016 (6% at the end of May) , would opt for a fairly sharp increase in the key rate — by 0.5 percentage points, to 5.5% per annum.

It is noted that the Central Bank spent the past year fighting for the health of the Russian economy after the damage caused by the coronavirus pandemic, for the first time applying its main "pill" — stimulating monetary policy. As a result, in the summer, the regulator reduced the rate to a historic low of 4.25% per annum. However, since the autumn, inflation has started to accelerate in the country, and the regulator was forced to put the easing cycle on pause. According to Rosstat, annual inflation still exceeds the regulator's target: in March, it accelerated to 5.8% compared to 5.7% in February.

Head of the Bank of Russia, Elvira Nabiullina, told RIA Novosti last week that at a meeting of the board of directors in June, the possibility of raising or maintaining the key rate will be considered. Later, the first deputy chair of the regulator Ksenia Yudaeva clarified to journalists that the Central Bank would consider raising the key rate either by 0.25 or immediately by 0.5 percentage points, while the probability of its preservation at the level of 5% per annum is less.

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