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On 26 April 2024, the Bank of Russia Board of Directors decided to keep the key rate at 16.00% per annum. Current inflationary pressures are gradually easing but remain high. Due to the remaining elevated domestic demand, which outstrips the capabilities to expand supply, inflation will return to the target somewhat more slowly than the Bank of Russia forecast in February.

The return of inflation to target and its further stabilisation close to 4% assume that tight monetary conditions will be maintained in the economy for a longer period than previously forecast. In the baseline scenario, the Bank of Russia has raised its forecast for the average key rate in 2024 and 2025 to 15.0–16.0% and 10.0–12.0%, respectively.  The Bank of Russia’s monetary policy is set to solidify disinflation processes unfolding in the national economy. According to the Bank of Russia’s forecast and given the monetary policy stance, annual inflation will decline to 4.3–4.8% in 2024 and return to 4% in 2025.

In March, current seasonally adjusted price growth was down to 4.5% in annualised terms (from 6.3% in February). This decline was largely caused by volatile components. Underlying inflationary pressures have also decreased but remain high due to strong growth in domestic demand. In March, seasonally adjusted core inflation declined to 6.1% in annualised terms (from 6.8% in February). Annual inflation did not change significantly since the beginning of March and, as of April 22, amounted to 7.8%.

Inflation expectations show mixed dynamics but generally remain elevated. Households’ inflation expectations have continued to decline in April. Businesses’ price expectations, on the contrary, rose slightly after several months of decline.

High-frequency indicators show that, in 2024 Q1, the Russian economy continued to grow notably faster than forecast. Consumer activity remains high amid a significant increase in households’ incomes and positive consumer sentiment. According to companies’ surveys, investment demand remains high. The Russian economy still shows a significant upward deviation from a balanced growth path. The GDP growth forecast for 2024 has been raised to 2.5-3.5%.

Labour shortages come as the key constraint on the expansion of output of goods and services. Concurrently, labour market tightness continues to increase. According to the Monitoring of Businesses, labour shortages increased in most industries. 

Monetary conditions have seen no considerable changes since the previous meeting of the Bank of Russia Board of Directors. Nominal and real interest rates continue to increase. High market interest rates support the propensity to save. Concurrently, higher incomes allow households to simultaneously increase savings and consumption.

Lending activity remains high, but lending dynamics are diverse across sectors. Unsecured consumer lending has sped up. Mortgage lending continues to slow down due to trends in the market segment. In March, corporate lending expanded faster after moderate growth at the beginning of the year. However, the growth rate of corporate lending generally declined compared with 2023 Q4 (seasonally adjusted).

Over the medium term, the balance of inflation risks is still tilted to the upside. The main proinflationary risks are associated with changes in terms of trade (including as a result of the geopolitical tensions), persistently high inflation expectations and upward deviation of the Russian economy from a balanced growth path, as well as with the fiscal policy normalisation path. Disinflationary risks are primarily related to a faster slowdown in domestic demand than expected in the baseline scenario. 

Following the Board of Directors’ key rate meeting on 26 April 2024, the Bank of Russia releases its medium-term forecast. On 13 May 2024, the Bank of Russia will publish the Summary of the Key Rate Discussion and the Commentary on the Medium-term Forecast. 

The Bank of Russia Board of Directors will hold its next key rate meeting on 7 June 2024. The press release on the Bank of Russia Board decision is to be published at 13.30 Moscow time.


Statement by Bank of Russia Governor Elvira Nabiullina in follow-up to Board of Directors meeting on 26 April 2024

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