The Bank of Russia has released a summary of its recent key rate discussion, highlighting several important aspects concerning the economic situation, inflation, monetary and external conditions, and alternatives to the key rate decision.
Participants in the discussion noted that monetary conditions have tightened more than anticipated in October. They suggested that if this tightness remains unchanged, lending growth and aggregate demand might slow down more rapidly in 2025 than previously forecasted by the Bank of Russia. This slowdown could help curb price growth and lower inflation expectations despite increasing inflationary pressures in recent months.
Due to a significant slowdown in lending growth, it was decided to pause and assess whether these changes are robust and how quickly they will affect price dynamics. Participants mentioned that if lending resumes at an elevated rate and inflation trends do not reverse by the next Board of Directors meeting scheduled for February 2024, the regulator may need to consider raising the key rate further.
After deliberation, the Board of Directors decided to maintain the key rate at 21.00% per annum.