(Finance) – The Russian central bank led by Elvira Nabiullina he raised nthe cost of money againin an attempt to slow the fall of the ruble, bringing the interest rates at 13% from the previous 12%. Last month, the Russian central bank intervened unexpectedly, raising rates by as much as 350 basis points in an attempt to stop the ruble from falling above 100 against the dollar.
At the moment in fact the ruble is strengthening against the dollarwith which it recorded an increase of 0.8% to 96.57, while the exchange rate with the euro changed hands at 102.92, up by 0.9%.
In announcing the monetary tightening, the central bank explained that “they have crystallized significant inflationary risksi.e. a growth in domestic demand that exceeds the capacity for production expansion and the depreciation of the ruble in the summer months”.
Inflation – according to the Russian central bank – reached a peak of 5.5% in September, up compared to 4.3% in July and 5.2% in August. Inflationary pressures also strengthened due to the depreciation of the ruble (imported inflation).
“Therefore, it is necessary to tighten further the monetary conditions – he underlined – to limit the increase in inflation and to bring price growth back to the target of 4% in 2024. The return of inflation to the target and its further stabilization close to 4% also implies that restrictive monetary conditions will remain for a long period“.
The Bank of Russia will evaluate the need for a further rate increase reference point in the next meetings and will take its further decisions taking into account current and prospective inflation movements compared to the target. According to the updated forecasts of its economists, in 2023 annual inflation will remain at 6–7% and will return to 4% in 2024.
The monetary policy pursued by the central bank – it is stated – will create the conditions for return the economy to a path of balanced growth. In its baseline scenario, the Bank of Russia expects the growth rate of GDP will be 1.5–2.5% in 2023by 0.5–1.5% in 2024, by 1–2% in 2025 and by 1.5–2.5% in 2026.