Bank of Russia Raises Key Rate First Time Since December 2018 to 4.5%

The Bank of Russia raised the key rate for the first time since December 2018 – by 0.25 percentage points to 4.5% per annum and said it could be raised again at following meetings, the regulator said on Friday, TASS reports.

“On 19 March 2021, the Bank of Russia Board of Directors decided to increase the key rate by 25 b.p. to 4.50% per annum. In the first quarter, the rate of consumer price growth has been higher than the Bank of Russia‚Äôs forecast. Domestic demand is recovering more steadily and faster than expected, outstripping the pace of output growth in a number of sectors. The expectations with regard to external demand are also improving on the back of additional fiscal support measures in certain countries and accelerating vaccination paces of the population. Inflation expectations of households and businesses remain elevated. The balance of risks has shifted towards pro-inflationary ones,” the regulator said.

At the same time, the Bank of Russia allowed the possibility of a further increase in the key rate at the next meetings.