The Central Bank kept the key rate at 4.25% per annum
‘Disinflationary risks in 2021 no longer prevail to the extent that it was previously. <...> Under the current monetary policy, annual inflation will be 3.5-4.0 percent in 2021 and will be near four percent in the future,’ the report says.
In March, due to the spread of the coronavirus, the Central Bank left the key rate at six percent per annum. Soon, the epidemiological situation began to worsen: the authorities expected that the closure of borders, the fall in world oil prices and restrictive measures would lead to a decrease in the country's gross domestic product for the first time since 2015. Therefore, in July, the Central Bank cut the rate to a historic low of 4.25 percent.
The fears did not come true: GDP fell by eight percent instead of the 9.6 percent expected by the Ministry of Economic Development, and nine to ten percent predicted by the Central Bank. However, along with the active recovery of the economy, inflation began to accelerate, and in September the moderator took the first pause in six months.
According to Rosstat, in July, annual inflation rose to 3.4 percent, in October – to 3.99 percent, and in November – to 4.42 percent, for the first time since 2015, exceeding the key rate of the Central Bank. Earlier, Head of the Central Bank Elvira Nabiullina noted that by the end of 2020, inflation will be about 4.5 percent, and the local peak of five percent will be in February.
Analysts polled by RIA Novosti predicted that due to the second wave of COVID-19, the weakening of the ruble against major world currencies, as well as foreign policy risks, the Central Bank will leave the key rate unchanged.
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