OREANDA-NEWS The possible maximum annual inflation in Russia may occur in the second quarter of 2024. Andrei Gangan, the first deputy director of the Monetary Policy Department of the Bank of Russia, warned about the peak of price growth in the country, as quoted by TASS.

Inflation in Russia has slowed down now, but it still exceeds the Central Bank's targets. However, current inflation trends are in line with the baseline forecast that the Central Bank has set for this year, Gangan added.

According to the representative of the Central Bank, the moderately harsh actions of the regulator should stabilize the situation in the country. The current level of the key rate affects aggregate demand and import demand, and also balances the dynamics of imports corresponding to the opportunities, including export ones, of the Russian economy.

"Accordingly, such an impact of monetary conditions through imports will have a stabilizing effect on the dynamics of the exchange rate," he explained.

In February 2024, the Bank of Russia decided to interrupt the cycle of tightening the PREP, which lasted almost six months, and kept the rate at 16 percent per annum. The Board of Directors concluded that the current rate level lowered inflation expectations and slowed down price growth.

According to Nikolay Ryaskov, Managing Director for Investments at the Management Company PSB, the key rate in Russia will not fall below 11 percent by the end of 2024. Such an outcome is likely, since the inflation expectations of businesses and the population amount to 9.5-12 percent per annum, which is two to three times higher than the Central Bank's target for annual inflation.