The central bank of Russia (BCR) announced on Friday an increase in its key rate by one point to 8.5%, a first since September 2022, in a context of a weakening of the ruble which raises fears of an acceleration of inflation in the country.
Inflation forecasts have risen, the BCR said in a statement, saying domestic demand trends and the ruble’s depreciation since the start of 2023 significantly amplify inflationary risk.
Despite this, the central bank maintains its objective of bringing inflation down to 4% in 2024, while it should reach, according to its forecasts, between 5% and 6.5% at the end of 2023.
Its decision to raise its key rate is in line with the expectations of analysts, who said they had been betting for several days on an increase of between 0.25 point and 1 percentage point.
Thanks to relatively stable macro-economic indicators, the key rate had nevertheless remained for several months at the level announced last September (7.5%), far from the peak reached just after the launch of the military intervention in Ukraine.
In the crowd of the first international sanctions, the BCR had drastically raised its rate to 20%, before proceeding with several cuts, reassured by the resilience of the Russian economy.
But in recent weeks, the erosion of the rouble, which was trading on Friday at 11:00 GMT at 100.3 rubles for the euro, prompted the BCR to act to avoid seeing inflation flare up again, like last year when prices rose by 17.8% in April.
According to observers, the weakening of the ruble is explained in particular by an oil price which remains relatively low, despite the decisions of OPEC+ aimed at limiting world production.
The first vice-president of the BCR, Ksenia Ioudaeva, had affirmed at the beginning of July that the current dynamics of the exchange rate were, according to her, linked to the fall in export earnings.
Asked about this, Russian presidential spokesman Dmitry Peskov assured him that the Kremlin clearly sees no threat to the country’s financial stability.
On the contrary, (…) the situation is better than could be expected, he had boasted of July 10.
Russia has been targeted by an unprecedented wave of international sanctions after the launch of its offensive in Ukraine in February 2022.
In a sign that these sanctions are weighing on the national economy, Russia’s gross domestic product contracted by 1.9% in the first quarter, according to Rosstat, and the national deficit could reach between 3% and 4% by the end of the year, according to experts, higher than the 2% expected.
Faced with the acceleration of federal spending, largely linked to the intervention in Ukraine, the Minister of Finance has already announced on Wednesday budget cuts for 2024 amounting to 450 billion rubles (4.4 billion euros).