Russia Interest Rates

Russia – The Central Bank of Russia kept its benchmark interest rate at 7.5% for the sixth consecutive meeting in June 2023, in line with market forecasts, but signaled a larger likelihood of rate rises in future sessions owing to rising inflationary concerns. According to the bank, inflation will grow as the war’s base effects fade, consumer demand rebounds from last year’s slump, and the impacts of a weaker ruble filter through.

Inflationary expectations are also rising as military expenditure and decreasing oil prices fuel a record-high federal budget deficit, putting pressure on the ruble and raising bond rates. Furthermore, manufacturing costs have risen as a result of the military mobilization, which caused a drop in labor force participation and put strain on enterprises’ capacity. Economic activity has also risen up faster than projected, according to policymakers. The CBR anticipates inflation to vary between 4.5 and 6.5% this year before stabilizing around 4%.