Not everyone likes a tough budget policy, but without raising the key rate in Russia, inflation will inevitably accelerate, Finance Minister Anton Siluanov warned, Prime reports.

“Maybe some people don’t like it, that the rate is increasing. But we can’t spin an inflationary spiral now, because it will hit people, the economy, and will eat up the income and gains that we have achieved in recent years,” he explained.

The head of the Ministry of Finance considered a tough budget policy in the context of sanctions pressure to be absolutely justified.

At the end of October, the Board of Directors of the Bank of Russia raised the key rate by 200 bp. – up to 15% per annum. This increase was the fourth in a row in six months: before that, the rate was increased in July, August and September.

The head of the Central Bank, Elvira Nabiullina, does not rule out that the regulator will continue to tighten monetary policy. The Bank of Russia will be ready to raise it again if there are no signs of a sustainable slowdown in inflation and a cooling of inflation expectations, she explained.

The Central Bank worsened its inflation forecast to 7-7.5% by the end of 2023 instead of the expected 6-7%. Ministry of Economic Development believes that inflation at the end of the year will be 7.5%.

Nabiullina made a forecast that inflation will begin to decline in the spring of 2024, since the peak of inflationary pressure passed in the third quarter of 2023.