The Central Bank of the Russian Federation raised the key rate to 5%
According to analysts of the Central Bank, the growth rate of consumer prices and inflation expectations of the population and business remain elevated. The recovery of demand is becoming increasingly stable and is outstripping the potential for output growth in a number of sectors. In these conditions, the balance of risks is shifted towards pro-inflationary ones. The inflation forecast of the Bank of Russia for 2021 has been raised to 4.7–5.2%.
‘The rapid recovery in demand and increased inflationary pressures are forming the need for an earlier return to neutral monetary policy. The Bank of Russia will assess the feasibility of further raising the key rate at the next meetings. Decisions on the key rate will be made taking into account the actual and expected dynamics of inflation relative to the target, the development of the economy on the forecast horizon, as well as the assessment of risks from internal and external conditions and the reaction of financial markets to them. In the context of the current monetary policy, annual inflation will return to the target of the Bank of Russia in mid - 2022 and will be near 4% in the future,’ said in a press release of the Central Bank.