Page 108 - RusRPTApr21

8.2 Central Bank policy rate
CBR increased the key rate 25bps to 4.5% on March 19 despite consensus expectations of no hike. Monetary authorities were motivated to tighten their stance by higher-than-expected inflation, elevated expectations and the strong recovery momentum in Russia and abroad.
The central bank’s latest guidance is that “inflation will return to the 4% target in the first half of 2022 and will remain at that level further on”.
This is a major change from its meeting in February, when its latest forecasts showed inflation falling to 3.7-4.2% by the end of this year. Against this backdrop, the central bank called for a return of interest rates to the 5-6% neutral range and gave a clear signal that it would hike interest rates further at its upcoming meetings.
Nabiullina explained that it was necessary to prevent a further acceleration of
108 RUSSIA Country Report April 2021 www.intellinews.com