Russia’s Central Bank May Raise Key Rates in July

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The Bank of Russia in July may consider raising the key rate in increments from 0.25 to 1 percentage point, said the head of the bank Elvira Nabiullina.

Since the beginning of spring, the Bank of Russia has raised its key rate following the results of already three meetings – in aggregate by 1.25 percentage points, to 5.5% per annum. At the same time, in June, the regulator tightened the signal regarding a further increase, noting that it sees the need for such a step at the next meetings.

“I think we can discuss from 25 basis points to 1 percentage point hike … At the last meeting, we signaled to the market that a rate hike in the future is necessary, but the size will be discussed at this meeting. I think the range is, yes,” she said in an interview with Bloomberg.

Thus, the rate in July may range from 5.75 to 6.5% per annum.

Nabiullina added that the Central Bank would like to have a balanced approach to raising the key rate: be fast enough to prevent the accumulation of inflationary risks, but move in steps predictable for the market.

“A sharp rise in the key rate may create difficulties for the financial market to adapt to the new level of the key rate. Therefore, we will calibrate our steps,” added the head of the Central Bank.