Thu, 22 Oct 2020

Russian central bank keeps key rate at 4.25 pct

Xinhua
19 Sep 2020, 03:44 GMT+10

Russia's ruble banknotes are seen in this file photo taken on April 28, 2017. (Xinhua/Shi Hao)

Russia's central bank said it keeps its inflation forecast at 3.7-4.2 percent for 2020 and at 3.5-4.0 percent in 2021, expecting that inflation will remain close to 4 percent in the following years.

MOSCOW, Sept. 18 (Xinhua) -- Russia's central bank on Friday kept its key lending rate at 4.25 percent.

"In recent months, price growth rates were slightly higher overall than the Bank of Russia's expectations," it said in a statement.

"This is driven by two key factors: an active recovery of demand after a period of self-isolation, as well as the weakening of the ruble on the back of generally increased volatility in global markets and higher geopolitical risks," it added.

In August, annual inflation in Russia rose to 3.6 percent from 3.4 percent in July, and, according to an estimate as of Sept. 14, it was equal to 3.7 percent, the statement said.

According to the bank's estimates, current consumer inflation indicators reflecting the most sustainable price movements are close to 4 percent, although consumer price dynamics continue to be heterogeneous due to an uneven recovery pace in various industries, it said.

The bank said it keeps its inflation forecast at 3.7-4.2 percent for 2020 and at 3.5-4.0 percent in 2021, expecting that inflation will remain close to 4 percent in the following years.

If the situation develops in line with the Russian central bank's baseline forecast, it will consider the necessity of further key rate cuts at its upcoming meetings, the bank said.

However, it said, uncertainty remains as to the rather long-term structural effects of the coronavirus pandemic for the Russian and global economies, specifically, the scale of a decrease in the national economic potential.

Potential global growth may also come under marked pressure from geopolitical factors including trade conflicts, the bank said.

The central bank has cut rates four times in 2020 to support the country's economy, which has taken a hit from the COVID-19 pandemic and related lockdown, as well as from low oil prices, Russia's main export item. ■

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