CBR reiterates it will consider rate hike if inflation not on track toward target

MOSCOW. April 17 (Interfax) - The Central Bank of Russia (CBR) has repeated its signal regarding the future direction of monetary policy, saying it will consider raising its key interest rate if the process of disinflation is inconsistent with plans to bring inflation back to the target rate of 4%.

"The Bank of Russia will continue to analyse the speed and sustainability of the decrease in inflation and inflation expectations. If the dynamic of disinflation does not ensure the achievement of the target, the Bank of Russia will consider the issue of raising the key rate," the CBR said in comments on inflation.

The CBR also reiterated that bringing inflation back to the target rate will require an extended period of tight monetary conditions in the economy.

It also repeated its February inflation forecast, projecting that the annual figure will be 7-8% in 2025, return to 4% in 2026 and stay at this level thereafter. The CBR will publish its updated medium-term macroeconomic forecast after its April 25 board meeting on the key rate.

Inflation in Russia slowed to 0.65% in March from 0.81% in February. Seasonally adjusted price growth in annual terms slowed to 7.1% in March from 7.5% in February, after accelerating to 12.9% in the fourth quarter of 2024 from 12.1% in the third quarter, 7.9% in the second and 5.3% in the first.

Annual inflation rose to 10.34% in March from 10.0006% in February.

"Most indicators of steady price growth continued to decrease from the previous month [seasonally adjusted], although they largely remained significantly higher than 4%. This indicates that the expansion of domestic demand still outstrips the ability to increase physical volumes of production," the CBR said.