Central Bank of Russia faces choice between hiking and holding rate, Sept meeting outcome unclear - VTB

MOSCOW. Aug 30 (Interfax) - The Central Bank of Russia faces a choice between tightening monetary policy or not in September: there is not enough data for another key rate increase, but inflationary trends are putting pressure on the regulator's current forecast, said Dmitry Pyanov, First Deputy CEO of VTB .

"On the one hand, the last rate hike and forecasts took place at the very end of July, and there will clearly not be enough data by September 13 on how the economy has reacted to this increase," Pyanov told journalists.

It is not yet clear whether the slowdown in lending in August can be explained by the Central Bank rate increase or by seasonal factors, he said.

"On the other hand, unfortunately, there is the banking sector's need for a ritual rate increase. This is due to the fact that the Central Bank has again trapped itself within stringent forecast inflation ranges," he said.

The Central Bank in July raised its 2024 inflation forecast to 6.5-7% from 4.3-4.8%. "We are now seeing a figure that, according to our forecasts, will result in annual inflation to 7.7% [by the end of 2024]," Pyanov said.