AKIPRESS.COM - The Bank of Russia Board of Directors decided to cut the key rate by 150 basis points to 9.50% per annum on June 10, the central bank said.

The external environment for the Russian economy remains challenging and significantly constrains economic activity. 

 According to the Bank of Russia’s forecast, given the current monetary policy stance, annual inflation will be 14.0–17.0% in 2022, decline to 5.0–7.0% in 2023 and return to 4% in 2024.

Current inflation is appreciably below the Bank of Russia’s April forecast. As of 3 June, annual inflation is down to 17.0% (vs 17.8% in April). Based on the latest data, growth rates of consumer prices have been low in May and early June.

The Bank of Russia’s baseline scenario expects annual inflation to run at 14.0–17.0% by the end of 2022. Inflation movements will be shaped including by such impactful factors as the efficiency of import substitution processes and the scale and speed at which imports of finished goods, raw materials and components will be recovering. According to the Bank of Russia’s forecast, given the current monetary policy stance, annual inflation will reduce to 5.0–7.0% in 2023 to return to 4% in 2024.

The Bank of Russia’s decisions in April-June to reduce the key rate will boost the availability of credit resources in the economy and limit the scale of economic decline. At the same time, the monetary policy stance will retain its necessary disinflationary impact to bring inflation back to target in 2024. The Bank of Russia forecasts that the key rate will average 10.8—11.4%1 in 2022, 7.0–9.0% in 2023 and 6.0–7.0% in 2024.