Russia Central Bank Holds Rate Steady At 16%, Signals Hike In July

(RTTNews) - The Bank of Russia left the key interest rate unchanged for the fourth policy session in a row, in line with expectations, and hinted at a rate hike in the upcoming meeting.

The board of directors, led by Governor Elvira Nabiullina, decided to leave the key interest rate unchanged at 16.00 percent. The rate has been at the current level since December.

Inflation has stopped decreasing and remains close to the levels of  the first quarter, the bank said. Growth in domestic demand is still outstripping the capabilities to expand the supply of goods and services, the bank added.

The Bank of Russia said it holds open the prospect of increasing the key rate at its upcoming meeting. The next policy session is on July 26.

"Furthermore, returning inflation to the target will require a significantly longer period of maintaining tight monetary conditions in the economy than it was forecast in April," the bank said.

"According to the Bank of Russia's forecast and given the monetary policy stance, annual inflation will return to the target in 2025 and stabilize close to 4 percent further on."