CBR might adjust 2023 forecast for average key rate in Feb

MOSCOW. Feb 3 (Interfax) - The Central Bank of Russia (CBR) might adjust its forecast for the average key interest for 2023 after its board meeting in February, CBR first deputy governor Ksenia Yudayeva said.

The CBR's October forecast projected that the average key rate would be 6.5-8.5% in 2023, 6-7% in 2024 and 5-6% in 2025.

"Now we will make a new decision. We will review the forecast, factor various new factors into the forecast: the situation on financial markets, the situation on oil and gas markets, foremost the correlation of the situation with demand, consumer demand, government [demand], the labor market, supply in the economy, the trade balance and so on. And, possibly, based on this information, we will also slightly adjust our forecast for the rate," Yudayeva said in an interview with Tinkoff Private Talks.

Last October, the CBR forecast that Russia's GDP will contract by 1-4% in 2023. The forecast assumes that the economy will begin to grow on a quarterly basis in the second half of the year, Yudayeva said.

"In other words, the fact that this is a minus doesn't mean that there won't be quarter-on-quarter growth. We expect it in the second half of the year," she said.

"In February we will make a new forecast and take into account the factors that were not taken into account in the previous forecast. This is, foremost, the situation on oil markets. It has changed quite significantly recently. In addition, we will look at the budget, of course, because the budget deficit last year was quite large. We will look at what will happen this year and how the budget issue will affect the economy. We will look at consumer demand. Consumer demand has been fairly muted so far," Yudayeva said.

The CBR will also assess the situation on the labor market, unemployment, and the growth of wages and household incomes. It will also factor in ongoing production constraints, sanctions and the change in the structure of the Russian economy in general.

"We will have to assess all these factors and see if we change our view regarding the situation in the economy for this year or not," Yudayeva said.

"For inflation, I've already said that our forecast [for 2023] is 5-7%," she added.