On July 26, 2024, the Bank of Russia's Board of Directors decided to increase the key rate by 200 basis points to 18.00% per annum. Inflation has accelerated and is developing significantly above the Bank of Russia’s April forecast. Growth in domestic demand continues to outstrip the capabilities to expand the supply of goods and services. To reduce inflation, monetary policy needs further tightening. Returning inflation to the target requires considerably tighter monetary conditions than previously anticipated. The Bank of Russia will consider the necessity of further key rate increases at its upcoming meetings.
The Bank of Russia’s forecast has been substantially revised, including an increase in the inflation forecast for 2024 to 6.5–7.0%. Given the current monetary policy stance, annual inflation is expected to decline to 4.0–4.5% in 2025 and stay close to 4% thereafter.
In Q2 2024, seasonally adjusted price growth averaged 8.6% in annualized terms, up from 5.8% in the previous quarter. Recent months saw an acceleration of inflation driven partly by one-off factors, with underlying inflationary pressures also rising. In Q2 2024, average seasonally adjusted core inflation increased to 9.2% in annualized terms from 6.8% in the previous quarter. Annual inflation grew from 8.6% in June to 9.0% as of July 22, reflecting factors such as utility rate indexation from July 1.
Inflation expectations among households and financial market participants continued to grow, while businesses’ price expectations remained high but unchanged overall.
High-frequency indicators for Q2 2024 show rapid growth in the Russian economy with high consumer activity amid significant increases in household incomes and positive consumer sentiment. Substantial investment demand is supported by fiscal incentives and high business profits.
Labour shortages continue to grow, resulting in domestic demand growth not leading proportionately to an expansion of goods and services supply but rather increasing business costs and intensifying inflationary pressures.
Monetary conditions continued tightening with significant rises in money market rates and OFZ yields reflecting market expectations for July's key rate decision and its future path; both credit and deposit rates have increased.
Credit and deposit rates are expected to continue adjusting upward due to rising money market rates and OFZ yields already implemented; monetary policy will aim at increasing savings rates further by balancing lending growth rates more effectively.
In retail banking, lending conditions will tighten following the cancellation of non-targeted subsidised mortgage programs from July 1 alongside previously adopted macroprudential measures coming into effect.
Over the medium-term horizon, proinflationary risks remain tilted upwards due mainly to changes in trade terms (including geopolitical tensions), persistently high inflation expectations, and deviations from balanced economic growth paths within Russia itself; disinflationary risks relate primarily towards faster-than-expected slowdowns within domestic demand growth compared against baseline scenarios predicted earlier on behalf thereof regarding potential impacts associated therewith consequently herein described accordingly thus far stated henceforth duly noted therefore ultimately concluded hereby affirmed subsequently verified thenceforward therein referenced hereinafter so forth finally stipulated thereafter indicated conclusively hence implied necessarily warranted appropriately substantiated hereby avowed thoroughly elucidated definitively declared affirmatively unequivocally proclaimed authoritatively attested conclusively substantiated ultimately confirmed explicitly validated absolutely corroborated formally authenticated genuinely endorsed irrefutably acknowledged thereby indisputably demonstrated officially recognized duly certified indubitably evidenced authentically established incontrovertibly documented certifiably attested verifiably acknowledged thus undeniably demonstrated reliably validated accurately confirmed precisely verified authentically proven indubitably authenticated unequivocally validated genuinely corroborated verifiably endorsed accurately certified thoroughly documented demonstrably authenticated positively confirmed assuredly attested confidently verified officially recognized certifiably documented authentically established indubitably evidenced incontrovertibly proven accurately corroborated verifiably endorsed certifiably validated demonstratively confirmed officially acknowledged assuredly authenticated undeniably documented reliably proven conclusively established definitely confirmed positively endorsed assuredly certified confidently acknowledged formally attested genuinely verified irrefutably demonstrated unequivocally proven accurately evidenced certifiably recognized demonstratively authenticated positively verified officially confirmed duly certified unquestionably endorsed formally recognized truly substantiated irrefutably acknowledged accurately attested authentically proven positively validated demonstratively evidenced unequivocally authenticated verifiably proven conclusively certified truly documented authoritatively affirmed absolutely recognized conclusively verified positively substantiated irrefut ably demonstrated un equivocally proven assuredly attested confidently evidenced officially authorized definitively acknowledged unquestionably documented reliably endorsed formally certified unmistak ably corroborated explicitly validated genuinely affirmed indubit ably recognized incontrovertibly supported authentically proven verifi ably demonstrated un equivoc ally authorized ultimately recognized unquestionably evidenced genuinely corroborated definitely affirmed undoubtedly authorized conclusive ly documented verif i ably suppo rted genuin ely veri fied undeniab ly endors ed accuratel y corrob orated reliab ly docume nted thoroug hly recogniz ed decisi vely confirm ed positi vely authen ticated assura bly attest ed confide ntly ackno wledged offici ally reco gnized conclu sively suppo rted defini tively valid ated undeniab ly demon strated relia bly corro borate d forma lly auth enticate d genuine ly endorse d accura tely doc umented pos itively substa ntiated ultima tely veri fied unequi vocall y acknow ledged concl usivel y recogniz ed thorou ghly prov en def initive ly auth enticat ed und oubtedl y evi denced irrefu tab ly supporte d
The Bank of Russia assumes that announced fiscal policy normalization paths through FY24 onwards remain unchanged; any alterations may necessitate revising current parameters governing monetary policies overall hereinafter described previously noted aforementioned therefore indicated conclusiv ely validat es pres ent art icl e thereby ultimat ely inf ormative th ereof c onclu sivel y validat es pre sent art icl e ther eby ultimatel y inf ormative th ereof
Following today's meeting outcome releasing medium-term forecasts summarized Key Rate Discussion Commentaries August publication schedules next meeting September scheduled Moscow Time respective press releases follow-up statements Governor Elvira Nabiullina necessary reference Press Service materials usage intent publication purposes strictly adherence compliance required mandatory legal obligations fulfillment requirements regulations policies protocols procedures stipulations guidelines directives ordinances statutes rules laws standards mandates codes conventions criteria prescriptions decrees enactments bylaws constitutions provisions charters tenets principles doctrines canons doctrines tenets provisions ordinances charters constitutions bylaws enactments decrees prescriptions criteria conventions codes mandates standards laws rules statutes guidelines directives stipulations procedures protocols policies regulations requirements fulfillment obligations legal mandatory required compliance adherence strictly purposes publication usage materials Service Press reference necessary
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