Russia's Central Bank hikes key rate by 100 bps to 8.50% pa as expected, returning to level of autumn 2017

MOSCOW. Dec 17 (Interfax) - The board of directors of the Central Bank of Russia (CBR) decided during the regulator's meeting on Friday to hike the key rate by 100 basis points to 8.50% per annum, as most analysts had expected.

During the previous meeting of the CBR's board of directors in October, during which it considered the issue of the key rate, the regulator hiked the rate by 0.75 bps to 7.50% pa after having increased the rate by 0.25 bps in September.

Most analysts polled by Interfax the day before had expected the CBR to hike the key rate by 100 bps, with only a few forecasting a rise of another 75 bps in the rate to 8.25% pa.

The scales in favor of a larger step were tipped off by the publication on Thursday of operational data on inflationary expectations for December. The release of this information is intended to shift the focus away from low indicators in weekly inflation, as well as to signal a more hawkish mood on the part of the CBR, analysts said.

According to the inFOM survey, inflation expectations in December increased by 1.3 percentage points from 13.5% to 14.8%, exceeding local highs and returning to the level of 14.7 % in March 2016.

The last time that the key rate was at 8.50% pa was during the stage of its reduction from September 18 to October 29, 2017.