CBR sends signal again: will evaluate feasibility of raising rate at October meeting

MOSCOW. Oct 10 (Interfax) - At its meeting in October, the Bank of Russia will evaluate the feasibility of further increasing the key rate, Central Bank Deputy Chairman Alexei Zabotkin told reporters in the State Duma.

"At the upcoming meeting, we will evaluate the feasibility of an additional rate increase based on updating the forecast; quite a lot of new data has yet to arrive before that moment. To anticipate [the decision] would probably be premature," Zabotkin said.

The Bank of Russia began raising its key rate in July, when it was increased 100 basis points to 8.5% per annum. At an extraordinary meeting of the board of directors on August 15, the Central Bank raised the key rate 350 bps to 12%. Then, a month later, on September 15, the Bank of Russia increased it another 100 bps to 13%.

Following the September meeting, the Central Bank stated that it would evaluate the feasibility of further increasing the key rate at its upcoming meetings.

Based on the results of the October Board of Directors meeting on the rate, the Bank of Russia will publish an updated medium-term macroeconomic forecast, which will also take into account budget projections for the new "three-year plan" and tariff decisions, Zabotkin said at a meeting of the State Duma Committee on the Financial Market.

Zabotkin also said that the Bank of Russia would have to maintain the rigidity of monetary policy next year in order to return inflation to target. He did not rule out a possible increase in policy rigidity.

"We must understand that rigidity in monetary policy is the relationship between the rate level and inflation expectations. Relatively speaking, with declining inflation expectations, the rigidity of monetary policy is achieved precisely due to the fact that inflation expectations decrease relative to the level of the interest rate," Zabotkin told reporters.