Russia’s central bank announced on the 17th that it will freeze its key interest rate at the current 7.50%. As the soaring inflation rate fell, it maintained its key interest rate for the fourth consecutive time.
According to TASS News Agency, the central bank decided to freeze the key interest rate at a financial policy-making meeting on the same day, and said it would maintain a hawkish stance and consider the need for a hike at future meetings.
Business activity and consumption are recovering, but inflation risks are arising due to the widening fiscal deficit and labor shortage, the central bank said in a statement.
In the meantime, the central bank said, “The acceleration of fiscal spending, worsening trade conditions, and labor market conditions continue to pose inflation risks. He pointed out that the overall balance of inflation risks has virtually not changed at the last meeting.
The annual inflation rate jumped to 11% in February. The media predicted that if the risk of rising inflation increases further, the central bank will start at the key interest rate.
The central bank expects inflation to fall below its target of 4 percent in 2024.
The key rate freeze was in line with market expectations. Analysts forecast that the central bank is likely to raise interest rates within this year as it remains hawkish.
Russia invaded Ukraine on February 24 last year. To curb inflation from financial and economic sanctions in Western countries, the central bank rapidly raised its key interest rate to 20 percent.
However, the benchmark interest rate began to be lowered in April last year and was lowered to 7.50% in September.
Russia’s central bank will hold its next monetary policy decision-making meeting on April 28.