On March 19, at a meeting on monetary policy, the Bank of Russia raised its key rate by 25 bp. up to 4.5%.
The inflation rate in the first quarter is higher than the forecast. Population inflation expectations remain at elevated levels compared to the pre-pandemic period.
Inflation as of March 15 was 5.8%. Annual inflation will peak in March and will decline. It will return to around 4% in the first half of 2022.
The impact of domestic demand on inflation is exacerbated by restrictions on foreign travel. People spend money unspent on travel on the consumption of goods and services within the country.
The economy is recovering faster than previously expected. The economic recovery may be slowed down, in particular, by lower rates of vaccinations and the spread of new strains of the virus, as well as the related tightening of restrictions.
In the future, when determining its actions, the Central Bank will take into account decisions on investing funds of the NWF. Now the Bank of Russia relies on the already adopted parameters of the federal budget and the deadline for the end of the government’s anti-crisis measures.
The Bank of Russia admits the possibility of a further increase in the key rate at the next meetings.
The next meeting of the Bank of Russia Board of Directors, at which the issue of the key rate level will be considered, is scheduled for April 23, 2021.
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