Page 75 - bne IntelliNews monthly country report Russia February 2024

8.2 Central Bank policy rate
The board of the Central Bank of Russia (CBR) has resolved to hike the key interest rate by 100 basis points to 16% at the last December 15 policy meeting of 2023, making a fifth consecutive key rate hike. (chart) As followed by bne IntelliNews, a hike of 100bp to 16% was a broad consensus expectation, as the CBR is forced to play catch up with persistently high inflation for the third meeting in a row. In less than five months the key rate has more than doubled from 7.5% to 16%.
Russian central bank governor Elvira Nabiullina reiterated her criticisms of various government economic policies and emphasised the necessity of maintaining high-interest rates.
Speaking at a forum in Moscow in December, Governor Nabiullina expressed her opposition to constant currency restrictions and cautioned against the use of subsidised lending programs, including the preferential mortgage scheme, as they can stimulate economic growth and necessitate additional monetary tightening.
In her address, Nabiullina's remarks underscored the challenges faced by the central bank, particularly as it grapples with a surge in inflation. Many of these government interventions are expected to be phased out in the coming year. Finance Minister Siluanov, while supporting the currency requirements introduced in October, announced plans to gradually lift them next year. Additionally, he revealed that the government would tighten the criteria for the subsidised mortgage scheme, including raising the minimum down payment.
These developments align with the central bank's objectives but highlight the complex task of maintaining economic stability amidst competing policy goals, including the ongoing war. The Central Bank of Russia still faces the formidable task of cooling the economy. November's inflation figures, set to be released today, are anticipated to reflect another increase, likely exceeding 7.5% year-on-year. With the prospect of 10% inflation looming next year, it is expected that the central bank will implement a 100 basis point interest rate hike next week, raising it to 16%.
In the face of these economic challenges, Governor Nabiullina remains steadfast in her criticisms and calls for prudence in economic policy decisions.
75 RUSSIA Country Report February 2024 www.intellinews.com