21 Jul 2023 15:00

Central Bank of Russia sends out still-hawkish policy signal after hiking rate 100 bps

MOSCOW. July 21 (Interfax) - The Central Bank of Russia sent out a still-hawkish policy signal after hiking its key rate as much as 100 basis points to 8.5% per annum on July 21.

The regulator, when it left its key rate unchanged yet again in June, toughened its already hawkish signal about the course of its monetary policy going forward, effectively warning that a first change since September was in prospect by altering its wording from "the Bank of Russia's forthcoming board meetings will consider the necessity of key rate increase" to "the Bank of Russia holds open the prospect of increasing the key rate at its next meetings."

The regulator has given a similarly hawkish signal after defying market expectations with its latest decision - the consensus was that the rate would be raised by 50 bps but some thought a rise of 75-100 bps was possible. The wording is little changed save for an editorial amendment, with the word "further" throw in, seeing as a first rate increase has already taken place. "The Bank of Russia holds open the prospect of further key rate increase at its next meetings to stabilize inflation close to 4% in 2024 and further on" is the signal given following the July 21 decision.