The head of the Central Bank of Russia, Elvira Nabiullina, said that the probability of raising the key rate in 2023 is higher than the probability of its reduction. According to her, inflation in Russia in January reached the maximum values of April 2022 due to volatile components. Ms. Nabiullina added that the inflation forecast for 2023 remains at the level of 5-7%, the regulator plans to return to the issue of revising the neutral rate in the summer.
“This does not rule out the possibility of a rate cut this year, but its probability and scale have decreased and, on the contrary, the likelihood has increased that some rate increase may be needed in order for inflation to meet the target in 2024 – close to 4%,” Elvira Nabiullina said. at a press conference after a meeting of the Board of Directors of the Central Bank.
Elvira Nabiullina added that the Central Bank will monitor how the government’s decision to reduce oil production by 500 thousand barrels per day and the entry into force of the embargo on petroleum products will affect the oil market. Ms. Nabiullina noted that the Central Bank lowered the forecast for oil prices for 2023.
Ms. Nabiullina added that in the middle of 2023, the Central Bank expects an increase in GDP dynamics. On average, the Central Bank predicts the dynamics of GDP this year from -1% to 1%.
According to her, the risks of a global recession have decreased. She noted that the lifting of anti-coronavirus restrictions in China and lower energy prices had a positive effect on the global economy. The reduction of risks was also affected by the fact that the central banks of developed countries approached the peak values of their rates.
“All this has a positive effect on the economies of developing countries, including Russia’s key trading partners. However, the positive impact of this factor on Russia will be restrained by sanctions,” said Elvira Nabiullina.
Today, February 10, the Board of Directors of the Central Bank left the key rate at 7.5% for the third time. The last time the key rate was lowered was in September. Earlier, Bloomberg, citing sources, reported that the government was seeking a rate cut from the regulator. In the Russian Cabinet of Ministers, this information was called unreliable.
Read more in the publication “Kommersant” “The key rate remained on pause.”