The rate at 16% will remain unchanged: the Bank of Russia will not reduce it at least until the summer of 2024

The Bank of Russia decided to keep the key rate at 16% at least until the summer of 2024.

This is a continuation of the rate hike policy begun last year, when the Central Bank moved from 7.5% in July to 16% by December. This increase was a reaction to the increase in inflation, which amounted to 7.4% for 2023 and reached 7.7% by mid-March 2024. It is predicted that inflation will drop to 4-4.5% this year, with its subsequent retention at about 4%, Rossiyskaya Gazeta reports.

Head of the Bank of Russia Elvira Nabiullina emphasizes the need to maintain strict monetary conditions due to the current situation. Inflation-related risks remain high due to labor shortages and export restrictions, which may constrain increased imports.

Banks do not plan significant changes in deposit rates, although they may adjust the terms of short-term deposits. The Central Bank rate at 16% helps stabilize deposit rates, which makes prospects for short-term deposits attractive. However, a reduction in loan rates is expected no earlier than the second half of the year.