< /p> Russian Central Bank in Moscow.
Moscow – The Russian Central Bank left its key interest rate at 7.5 percent today. However, it indicated that it could be forced to raise interest rates this year due to inflationary risks linked to a widening budget deficit, labor shortages and a weaker ruble. It also improved the outlook for this year's development of the Russian economy.
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Bank Governor Elvira Nabiullin said that inflation in Russia probably rose to the highest level since last April in January. The bank confirmed that at the end of this year, it expects inflation in the range of five to seven percent. It remains hopeful that inflation will return to its four percent target next year.
“If inflation risks intensify, Russia's central bank will consider the need to raise the key rate at its upcoming meetings,” the bank said. “In case of further growth of the budget deficit, inflationary risks will increase and a tighter monetary policy may be needed,” it also says in today's statement.
The central bank's new forecast for this year's development of Russia's gross domestic product (GDP) ranges from a one percent decline to one percent growth. In its previous forecast, the bank predicted a drop in GDP of between one and four percent, Reuters writes.
“The threat of a global recession has eased. The opening of China's economy after the easing of covid restrictions, the fact that central banks in advanced economies are close to peaking at increasing interest rates, falling energy prices, especially in Europe – all this has a positive effect on developing economies, including Russia's key trading partners. However, the positive effects of these factors on Russia will be limited by sanctions,” said Nabiullinova.
Russian President Vladimir Putin said this week that the Russian economy has withstood the shocks of Western sanctions and should see moderate growth this year.
In late January, the International Monetary Fund (IMF) predicted in its updated global outlook that Russia the economy will grow by 0.3 percent this year, while he expected a 2.3 percent contraction in October. Last year, Russian GDP fell by 2.2 percent, according to the IMF's estimate, while it fell by 2.5 percent, according to the Russian Central Bank's estimate.
