Higher rate forecast, signal might be enough to tighten monetary conditions and return inflation to target in 2025 - Central Bank of Russia

MOSCOW. Aug 7 (Interfax) - A higher forecast key rate path and maintaining a hawkish policy signal may be enough to tighten monetary conditions to the extent needed to return inflation to target in 2025, the Central Bank of Russia said in the summary of the discussion at its July board meeting.

The Central Bank raised its key rate 200 basis points to 18% per annum in July and said it would consider the necessity of further key rate increase at its upcoming meetings.

The regulator also said in its updated macroeconomic forecast in July that the average key rate is expected to be in the range of 16.9%-17.4% in 2024 (April forecast - 15.0%-16.0%), 14%-16% in 2025 (10.0%-12.0%) and 10%-11% in 2026 (6.0%-7.0%). The average key rate is projected to be in the range of 18.0%-19.4% from July 29 to the end of 2024.

The long-term neutral rate forecast was raised from 6%-7% to 7.5%-8.5%.