Russia raises interest rates as inflation hits highest since 2016: Reuters poll

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FILE PHOTO: Attendees show the headquarters of the Central Bank of Russia on March 29, 2021 in Moscow, Russia. The sign says “Bank of Russia”. Reuters / Maxim Shemetov

September 30, 2021

by Andrey Ostrokho

MOSCOW (Reuters) – Russia needs to raise interest rates further to fight stubborn high inflation, which is better than expected and shows few signs of recession, a Reuters poll said on Thursday.

Russia’s export-oriented economy has already reached pre-pandemic levels and is on a growth spurt. But the recovery, coupled with global inflation and a weaker ruble, is raising consumer prices and lowering living standards.

A consensus forecast from 22 analysts polled in late September suggested the central bank would raise its sixth key rate this year to 7% at its board meeting on October 22.

Some analysts said the central bank addressed inflation by raising interest rates to 7.25%, rising to 7.3% at the end of September, and surpassing the 4% target last seen five years ago. where did it go.

“Russia is now addressing the consequences of additional social payments made by the government ahead of the parliamentary elections on September 17-19,” Ing said.

President Vladimir Putin raised inflation expectations by ordering pensioners and the military to make lump-sum payments ahead of the election.

The consensus forecast for inflation at the end of 2021 has increased to 6.5% from 6.0% seen at the end of August.

Higher interest rates designed to curb inflation are a delicate issue in Russia, and there is a need to support the ruble by making investments in high-yielding ruble assets more attractive.

Analysts predict the ruble will trade at $72.70 and euro 86.00 12 months from now, compared to 74.00 and 89.00, respectively, traded in the previous elections.

“The ruble remains bullish as fundamentals improve,” said the Oxford Economics research firm.

“But given the evidence of accelerating net private capital outflows, we believe that USD/RUB, which is currently around 73, will only grow by 3% against the USD for the rest of 2021. I am. “

Despite the higher rates, surveys show the economy is on track to grow at 4.3% this year, the fastest in 10 years, confirming the forecast from a month earlier.

Most Reuters poll forecasts were based on at least 10 individual forecasts.

(Reporting by Andrey Ostrokh, edited by William Maclean)

Source link Russia raises interest rates as highest inflation since 2016: Reuters poll

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