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The Bank of Russia will consider an increase in its key rate of as much as 100 basis points at its next meeting on Dec. 17 as inflation continues to run at double its target, Governor Elvira Nabiullina said.
“The range is from zero to 100” basis points, she told reporters. “Inflation is running at the high end of our forecast and we will take that into account,” she added, noting that keeping the rate unchanged is the least likely scenario.
The Bank of Russia has raised its key rate 325 basis points this year, with a 75 basis-point hike at the meeting last month. Inflation is running over 8%, the highest since January 2016.
“There has not been a notable deceleration in inflationary dynamics, the bank is likely to take another bold move and lift its key rate by at least 75 basis points, before taking a break through January,” said Lilit Gevorgyan, economist at IHS Markit in London.
What Our Economists Say:
“Nabiullina's comments may suggest the central bank will respond aggressively to any further upward surprises in inflation. A big move is on the table, but the size of the hike will depend on the data over the next week.”
--Scott Johnson, Bloomberg Economics
Tatiana Orlova, economist at Oxford Economics, said data from the last few weeks show price growth beginning to slow down, giving the central bank room for flexibility. “Monthly inflation in November will be lower than in October, so heavy munitions are not needed,” she said.
Nabiullina said it's too early to assess the impact of the Omicron Covid-19 variant on monetary policy. She also said there's no reason for the central bank to suspend its regular foreign-exchange purchases despite the recent drop in the ruble.
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