Central Bank of Russia hikes key rate to 13%

MOSCOW. Sept 15 (Interfax) - The Central Bank of Russia's board of directors decided at its meeting on Friday to hike the key rate 100 basis points to 13% per annum.

Expectations differed ahead of the decision with some analysts forecasting that the regulator would hold the rate at 12% and other saying it might put it up 100-200 bps to 13%-14%.

Inflationary pressure in the Russian economy remains high, the Central Bank said in its commentary to Friday's rate decision.

"Significant pro-inflationary risks have crystallized, namely the domestic demand growth outpacing the output expansion capacity and the depreciation of the ruble in the summer months. Therefore, it is required to additionally tighten monetary conditions to limit the upward deviation of inflation from the target and return it to 4% in 2024," it said.

The return of inflation to the target and its further stabilization close to 4% also implies that tight monetary conditions will be maintained in the economy for a long period, it said.

The Central Bank hiked the key rate as much as 350 bps to 12% at an extraordinary meeting on August 15. The rate was raised 100 bps to 8.5% in July, the first rise after six straight decisions to hold the rate, which had been 7.5% since September 2022.