20 Apr 2022 14:01

Russian Central Bank's key rate could return to 7%-7.5% pa once inflation returns to 4% - deputy governor

MOSCOW. April 20 (Interfax) - The key rate of the Central Bank of Russia (CBR) could return to 7%-7.5% per annum once the inflation target of 4% has been attained, Central Bank Deputy Governor Alexei Zabotkin believes.

"If we recall 2018-2019, when the economy was in relatively stable condition and inflation fluctuated around 4%, the key rate was somewhere around 7%-7.5%. Probably, it will return to approximately these levels when inflation returns to 4%," Zabotkin said during a discussion of the Central Bank's annual report with the Just Russia party in the State Duma.

Central Bank Governor Elvira Nabiullina recalled that inflation should return to the target of 4% in 2024, according to the CBR's forecasts.

The CBR plans to publish an updated three-year macroeconomic forecast that will also include the average key rate following the pivotal meeting of the regulator's board of directors on April 29.

Zabotkin recalled that the CBR hiked the key rate to 17% during the first wave of sanctions amid high inflation in December 2014; and then, as risks decreased, the regulator gradually cut the rate.

"The story is different today. I do not call for a one-on-one look at this, though, of course, our task is to ensure a commensurate reduction in the rate as inflation declines. If inflation decreases, then the key rate should follow it," Zabotkin said.