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The Russian economy deviated from the baseline scenario

The Bank of Russia at the upcoming meeting will discuss the step of raising the key rate, Elvira Nabiullina, the head of the regulator, said. She noted that at the moment the Russian economy has significantly deviated from the baseline scenario, and inflationary risks have been realized. The next meeting of the Board of Directors of the Bank of Russia, which will consider the issue of the key rate level, is scheduled for July 26.

Elvira Nabiullina, Bank of Russia Governor. Alexey Nikolsky / RIA Novosti

“The latest data shows that we have largely deviated from the baseline scenario. In July, we will clarify our forecast, proinflationary risks not only increased, but also realized. But, of course, in July on the agenda there will be a discussion of raising the rate. I think that the main subject of discussion will be the step (of raising the rate),” Ms. Nabiullina said, speaking at the Financial Congress.

At a meeting held on June 7, the Board of Directors of the Bank of Russia decided to keep the rate at 16%. On the eve of the meeting, a significant part of the market was confident that the rate would be raised – presumably up to 17% per annum. Elvira Nabiullina later confirmed that the board of directors considered proposals to raise the rate to 17% and 18%, but they were rejected.

“It is gratifying that the mega-regulator is steadily following the inflation targeting policy,”  Sergey Khestanov, economist, associate professor at RANEPA, says. “At least one benchmark remains stable in the future sea of financial markets.”

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