13.09.2024, 13:53
The Bank of Russia has raised its key rate
Source: OREANDA-NEWS
OREANDA-NEWS Following the meeting of the Board of Directors on Friday, September 13, the Bank of Russia decided to raise the key rate to 19 percent per annum. This is stated in a message on the regulator's website.
The main reason for the tightening of monetary policy was the continuing high inflationary pressure, which most likely excludes keeping inflation below seven percent by the end of the year, as the July forecast suggested. The growth of domestic demand continues to significantly outstrip the possibilities of expanding the supply of goods and services.
At the same time, the labor market remains tough. Against this background, the Central Bank does not rule out a new rate hike at its meeting in October. In the past, such signals most often led to a tightening of PREP.
On the eve of the meeting, analysts and market participants differed in their assessments of the Central Bank's actions. Forecasts ranged from keeping the rate at 18 percent to raising it by two percentage points. The main reason for doubt was the contradictory statistics.
Signals of a cooling economy have not yet led to a slowdown in inflation and inflation expectations, on the contrary, prices rose much faster than expected in August and September. On the other hand, an excessively sharp increase in the rate could be a serious blow to the economy and lead to additional budget expenditures, which would also accelerate inflation.
The central bank acknowledged a slight slowdown in economic growth in the second quarter, but suggested that it was due not to cooling domestic demand, but to increasing supply-side constraints and a decrease in external demand. Thus, the deviation from the trajectory of balanced growth remains significant.
The day before, the European Central Bank (ECB) cut all three key interest rates. The monetary policy easing cycle is associated with the stabilization of inflation and an improvement in the state of the economy in the region.
The main reason for the tightening of monetary policy was the continuing high inflationary pressure, which most likely excludes keeping inflation below seven percent by the end of the year, as the July forecast suggested. The growth of domestic demand continues to significantly outstrip the possibilities of expanding the supply of goods and services.
At the same time, the labor market remains tough. Against this background, the Central Bank does not rule out a new rate hike at its meeting in October. In the past, such signals most often led to a tightening of PREP.
On the eve of the meeting, analysts and market participants differed in their assessments of the Central Bank's actions. Forecasts ranged from keeping the rate at 18 percent to raising it by two percentage points. The main reason for doubt was the contradictory statistics.
Signals of a cooling economy have not yet led to a slowdown in inflation and inflation expectations, on the contrary, prices rose much faster than expected in August and September. On the other hand, an excessively sharp increase in the rate could be a serious blow to the economy and lead to additional budget expenditures, which would also accelerate inflation.
The central bank acknowledged a slight slowdown in economic growth in the second quarter, but suggested that it was due not to cooling domestic demand, but to increasing supply-side constraints and a decrease in external demand. Thus, the deviation from the trajectory of balanced growth remains significant.
The day before, the European Central Bank (ECB) cut all three key interest rates. The monetary policy easing cycle is associated with the stabilization of inflation and an improvement in the state of the economy in the region.
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