Bank of Russia leaves policy rate intact at 16%

The Bank of Russia (CBR) left its key policy rate without change at 16% for a third consecutive meeting in April, in line with market expectations.

The central bank warned that interest rates would need to remain elevated for longer than previously anticipated to bring inflation under control.

Upside risks to inflation persisted, as a recovery in domestic demand continued to outpace the limited capacity of the nation’s economy. This warranted an even longer period of peak interest rates, the central bank noted.

The benchmark policy rate is not expected to fall below 15% in 2024, the bank added.

Meanwhile, the CBR’s full-year 2024 inflation forecast was revised up to 4.3%-4.8%, with inflation expected to ease to 4% next year.

With regard to GDP growth, the Bank of Russia said it expected the country’s economy to expand 2.5% to 3.5% this year.

The USD/RUB currency pair settled 0.34% lower at 91.8752 on Friday. For the week, the exotic currency pair retreated 1.21%, while extending the loss from the prior weekly period.