Central Bank of Russia hikes key rate 100 basis points to 19%

MOSCOW. Sept 13 (Interfax) - The Central Bank of Russia's board of directors at its meeting on Friday decided to raise the key rate by 100 basis points to 19% per annum.

This was within market expectations. The consensus was initially that the regulator would hold the rate at 18% but some analysts revised their forecasts towards increasing it to 19%-20% after Rosstat published inflation data for August and early September.

Current inflationary pressures remain high, the Central Bank said in a commentary to its decision. "By the end of 2024, annual inflation is likely to exceed the July forecast range of 6.5-7.0%. Growth in domestic demand is still significantly outstripping the capabilities to expand the supply of goods and services. Further tightening of monetary policy is required to resume the disinflation process, reduce inflation expectations, and ensure the return of inflation to the target in 2025," it said. The Central Bank holds open the prospect of increasing the key rate at its next meeting.

The Central Bank had kept the rate at 16% for four meetings in a row after raising it on December 25 last year by 100 bps from 15%. It put the rate up to 18% on July 26.

The next meeting of the Central Bank's board takes place on October 25.