UPDATE 1-Russia cenbank plans to keep key rate above 6% until mid-2023

  • 11/15/2021
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(Adds detail, quotes) MOSCOW, Nov 15 (Reuters) - Russians are scared of rising prices and the central bank plans to hold its key interest rate above 6% until at least mid-2023 to bring inflation back down, central bank governor Elvira Nabiullina said on Monday. The central bank has raised its key rate six times so far this year, struggling to rein in consumer inflation that accelerated to its highest since 2016 of 8.14% in early November, above the 4% target. The next rate-setting meeting is on Dec. 17. “Inflation is a real disaster that makes people poorer. The increase in inflationary expectations, which really worries us, and the way it affected financial behaviour show how people are afraid of inflation,” Nabiullina said. “We need to bring inflation back to the 4% target at any cost.” Presenting the bank’s monetary policy outlook for 2022-2024 at the lower house of parliament, Nabiullina confirmed readiness to raise the key rate again at the December board meeting. A Reuters poll showed late last month the market on average expected the Bank of Russia to lift the key rate to 8% by the year-end. Nabiullina said inflation, the bank’s main area of responsibility, will slow towards the target next year from 7.4-7.9% at the end of 2021. But she pointed at possible upside risks, saying the nature of inflation spikes could be not as temporary as previously thought. Nabiullina also said Russia’s economy has returned to its pre-pandemic growth trend and jobless numbers are close to record lows. President Vladimir Putin said last week the Russian economy was on track to post its strongest growth in 13 years and expand by 4.7% in 2021. (Additional reporting by Katya Golubkova and Elena Fabrichnaya)

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