Russia Central Bank Keeps Key Rate Unchanged

(RTTNews) - Russia's central bank left its key interest rates unchanged for the third consecutive meeting on Friday but cautioned about upside risks to inflation.

The board of directors of the Bank of Russia, headed by Governor Elvira Nabiullina, decided to hold the key rate at 16.00 percent.

As domestic demand outstrips the capabilities to expand supply, inflation will return to the target somewhat more slowly than the central bank forecast in February, the bank said.

The bank added that the tight monetary conditions will be maintained in the economy for a longer period than previously forecast.

The central bank upgraded its inflation outlook for 2024 to 4.3 percent-4.8 percent from 4.0-4.5 percent. Inflation is forecast to return to 4 percent in 2025. Inflation expectations showed mixed dynamics but remained elevated, the bank noted.

The growth outlook for 2024 was revised up to 2.5 percent to 3.5 percent.

The balance of inflation risks is still tilted to the upside, the bank observed. The main proinflationary risks are associated with changes in terms of trade, persistently high inflation expectations and upward deviation of the economy from a balanced growth path and the fiscal policy normalization path.