7 Jun 2024 19:26

Central Bank holds open possibility of considerable increase in key rate in July - Nabiullina

MOSCOW. June 7 (Interfax) - The Central Bank of Russia remains committed to returning inflation to the 4% target and holds open the possibility of a considerable increase in the key rate at its meeting in July, Central Bank Governor Elvira Nabiullina said.

"The Bank of Russia remains determined to return inflation to the target of 4%. If persistent inflationary pressures do not ease and proinflationary risks materialize, we hold open the prospect of considerably increasing the key rate in July. Monetary conditions will remain tight for as long as needed to bring inflation back to the target," the Central Bank quoted Nabiullina as saying at a press conference.

The Central Bank on Friday decided to keep its key rate unchanged: most analysts said they expected the rate to stay at 16%, but some said there was an increasing likelihood of it being hiked to 17%-18% in June-July.

Nabiullina said directors discussed holding the rate or hiking it by 100 or 200 basis points. "The options we considered were holding the rate and increasing it, and there were proposals [to increase it] to 17% and to 18%. Last time I said that there were options to hold and increase the rate, but in this time there were more opinions that we should think about raising the key rate," she said.

She said a "considerable" increase on the Central Bank's understanding is one with an increment of more than a percentage points.

"What do we mean by considerable? This is a rate increase including more than 1 percentage point," Nabiullina said.

"We believe that the likelihood of an alternative scenario that will require a rate increase has increased. If it materializes and we end with the alternative scenario, then yes, in July we will indeed raise the rate," Nabiullina said.

"If some unforeseen shocks materialize, we can always gather for an unscheduled meeting, but even the alternative scenario does not envisage this," she said.