The Central Bank met analysts' expectations and raised the key rate, by as much as two percentage points, from 19% to 21%. This is a new historical record.
«Inflation is significantly higher than the July forecast of the Bank of Russia. Inflationary expectations continue to increase. The growth of domestic demand significantly outpaces the possibilities of expanding the supply of goods and services. Additional budget expenditures and the associated expansion of the federal budget deficit in 2024 have pro-inflationary effects», — stated the Central Bank's message.
This is a new historical record and the most radical scenario among those previously voiced by experts. The rate was fixed at 20% on February 28, 2022. The Central Bank then reacted to the sharp fall in the ruble exchange rate due to the start of the invasion of Ukraine and the subsequent sanctions.
The rate decreased until September 2022, then rose again, and from December last year to July remained unchanged at 16%. However, due to high inflation, the Russian Central Bank was forced to raise it again. On July 26, it increased the rate by two percentage points at once to 18%, and on September 13 to 19%.
At the same time, the Central Bank allowed for the possibility of further raising the key rate, forecasting an average key rate by the end of 2024 in the range of 21-21.3%.