Page 61 - Russia OUTLOOK 2024

4.0 Inflation & Monetary Policy
The Economics Ministry maintained its inflation forecast at the end of 2023 at 7.5%, Economic Development Minister Maxim Reshetnikov said on the sidelines of the "Russia Calling!" forum on December 8. The CBR projects inflation to be in the range of 7-7.5% as of the end of 2023.
Russia’s Finance Ministry projects inflation at 4.5% in 2024, Minister Anton Siluanov said at the same event.
The central bank kept its end-2024 inflation forecast unchanged at 4.0-4.5% y/y at the last rating meeting of the year on December 15, but Capital Economics thinks this will be hard to achieve. With the economy overheating, supply-side constraints biting and additional fiscal stimulus coming through, Capital Economics thinks inflation could reach 10% in the middle of next year. The analyst consensus forecast for inflation at end-2024 has risen to 5.2% in recent months and our forecast is near 6.0%.
“To cool the economy, the Central Bank raised interest rates to 16% at its final board meeting of 2023. In doing so, the bank has given itself plenty of room for manoeuvre. Even though we’re likely approaching the end of the bank’s tightening cycle, the rate is likely to remain in double figures through[out] next year; predictions say somewhere between 12.5% and 14.5%,” said Alexandra Prokopenko, a political economy analyst.
The CBR expects annual inflation to reach peak levels in the spring-summer of 2024, the regulator’s Deputy Governor Alexey Zabotkin said on October 11.
"The highest level of annual inflation will probably be passed in spring-summer," he told reporters. Zabotkin said that the CBR would "consider the reasonability of additionally raising the rate relying on the revised outlook."
According to the CBR, considering its current monetary policy, annual inflation in the country will register 6-7% in 2023, return to 4% in 2024 and remain close to 4% in the future.
Russia’s central bank has been concerned about inflation developments and delivered 550bp of interest rate hikes between July and November 2023, taking the policy rate to 13.00%.
• 4.1 CPI
According to the CBR’s December macroeconomic survey, the median
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