The central bank had previously hiked rates at five successive meetings over a six-month period
The Bank of Russia’s governor, Elvira Nabiullina © Sputnik / Vladimir Fedorenko
Russia’s central bank left its key interest rate unaltered at 16% at its scheduled meeting on Friday, saying that tight monetary policy will be necessary to return stubborn inflation back to target levels.
The no-change decision comes after five consecutive hikes dating back to June that more than doubled borrowing costs in Russia in an effort to tame soaring consumer prices. The tightening cycle delivered a total of 850 basis points of hikes since July, including an unscheduled emergency hike in August after the ruble plunged past the 100 mark against the US dollar.
Given its tight stance, the central bank now projects annual inflation to decline to 4-4.5% in 2024 and to subsequently stabilize at close to 4% further on. In the statement accompanying its decision, the regulator gave no guidance about the likely direction of its next move.
“Current inflationary pressures have eased compared with the autumn months but remain high,” the statement read.
READ MORE: Russian central bank announces major interest rate hike
“Domestic demand is still outstripping the capabilities to expand the production of goods and services,” it said, adding that inflation risks remained elevated over the medium-term.
The regulator emphasized that higher rates of saving among households and “cooling demand for imports” was helping to “put the economy back on a balanced growth path.”
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