On December 18, at a meeting on monetary policy, the Bank of Russia, as expected, kept its key rate at 4.25%.
Inflation is growing above the forecast of the Bank of Russia and by the end of 2020 is expected to be in the range of 4.6-4.9%. One-off pro-inflationary factors have a more significant and prolonged upward influence on prices amid rising inflationary expectations of the population and business, as well as supply-side constraints.
The deterioration of the epidemic situation in Russia and in the world has a significantly less significant restraining effect on economic activity than in the second quarter.
The situation in external financial and commodity markets improved amid expectations of a faster recovery of the global economy due to progress in the development of vaccines.
Disinflationary risks in 2021 no longer prevail to the extent that they were previously, given the strengthening of short-term pro-inflationary factors and the risks of their longer duration.
According to the forecast of the Bank of Russia, in the context of the monetary policy being pursued, annual inflation will be 3.5-4.0% in 2021 and will be close to 4% in the future.
Given the high heterogeneity of current trends in the economy and price dynamics, the Bank of Russia will assess the further development of the situation and the potential for an additional reduction in the key rate. The Bank of Russia will make decisions on the key rate, taking into account the actual and expected dynamics of inflation in relation to the target, the development of the economy over the forecast horizon, as well as assessing the risks from internal and external conditions and the reaction of financial markets to them
The next meeting of the Bank of Russia, which will decide on the key rate, will be held on February 12, 2021.
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