Фото: pixabay.com
The Board of Directors of the Bank of Russia has decided to keep the key interest rate at 14% per annum. This is the second consecutive time the regulator has held the rate unchanged. The last rate cut was in July.
As it did a month ago, the Bank of Russia hinted in its press release at the consequences of attacks on oil refineries.
“Current price pressures remain elevated. Inflation expectations remain high. According to the Bank of Russia, underlying price growth is not slowing and stands at 5–6% on an annualized basis, primarily due to the impact of temporary reductions in production capacity in certain industries. This requires restrained growth in aggregate demand to resume the decline in underlying inflation,” the regulator said in a statement.
At the same time, it forecasts further rate cuts in 2027. Under the central bank’s baseline scenario, the average key interest rate next year will range from 12.5% to 13.5% per annum. The Bank of Russia also expects inflation to return to 4% in 2027.
In the third quarter, inflation in Russia stood at 8% after seasonal adjustment, while core inflation rose to 6.2%.
“Volatile components, primarily motor fuel, continued to influence price dynamics. Annual inflation stood at 6.8% as of October 19, according to estimates, and is expected to reach 7.1–7.6% by the end of the year,” the Russian central bank said.
The regulator notes that the economy is growing at a moderate pace. Business sentiment improved slightly in October. Consumer demand growth is slowing but remains elevated. Investment activity continues to recover compared with levels at the beginning of the year.
Russia is Belarus’s main trading partner. The key interest rate in Russia affects borrowing costs in the country and also indirectly influences demand for Belarusian goods, particularly investment goods.