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will most likely post full-year loss, Chief Executive Officer of Russia’s second-biggest lender Andrey Kostin said on the sidelines of the 15th Verona Eurasian Economic Forum in Baku. Earlier, VTB CEO said he projected notable profit in 2023, adding that no dividend payments for 2022 were expected. Net profit of VTB Group under International Financial Reporting Standards (IFRS) soared 4.3-fold in 2021 compared with the previous year to 327bn rubles.
8.2 Central Bank policy rate
On 28 October 2022, the Bank of Russia Board of Directors decided to keep the key rate at 7.50% per annum. Current growth rates of consumer prices as a whole remain low, contributing to a further slowdown in annual inflation. Inflation expectations of households and businesses are high and have slightly grown relative to the summer months. The updated forecast assumes inflation for the end of 2022 to total 12.0–13.0% and takes into account the preponed indexation of utility prices among other factors. The Bank of Russia assesses that the partial mobilisation will serve as a deterrent to consumer demand and inflation over the horizon of coming months. However, its subsequent effects will be pro-inflationary as it adds to supply-side restrictions.
Moving forward, in its key rate decision-making, the Bank of Russia will take into account actual and expected inflation dynamics relative to the target and economic transformation processes, as well as the risks posed by domestic and external conditions and the reaction of financial markets. According to the Bank of Russia’s forecast, given the monetary policy stance, annual inflation will drop to 5.0–7.0% in 2023 to return to 4% in 2024.
Inflation movements. Annual inflation continues to slow down gradually. In September, growth in consumer prices decelerated to 13.7% in annual terms (after 14.3% in August) and declined, as of 21 October, to 12.9%.
In September, monthly prices increased their growth pace on a seasonally adjusted basis. That came in part on the back of a one-off rise in insurance and mobile tariffs. Stripping out the impact of one-off factors, the monthly growth pace of prices was also up but remained low. Flash estimates in October point to overall low current inflationary pressures.
Despite the progressing decline in annual inflation, inflation expectations of households and businesses are high and have slightly grown relative to the summer months. Analysts’ medium-term inflation expectations are anchored close to 4%.
Under the Bank of Russia’s baseline scenario, annual inflation is forecast to run at 12.0–13.0% by the end of 2022. The updated forecast of the Bank of
84 RUSSIA Country Report November 2022 www.intellinews.com