Deputy Chairman of the Bank of Russia Alexey Zabotkin said that the regulator’s updated forecast suggests that in 2024 the key rate will begin to decline. He noted that the exact timing will depend on inflation. On December 15, 2023, the Bank of Russia for the fifth time in a row raised key rate – from 15% to 16% per annum.
“According to the forecast, which was updated at the meeting in October, it is assumed that the average key rate during 2024 will be in the range from 12.5% to 14.5%. Over the course of this year, the rate will indeed decline from the current level of 16%, to which it rose in December. But exactly when this will happen will depend on how the situation with inflation, inflation expectations, credit growth, money supply and aggregate demand develops,” Mr. Zabotkin said on air Private Talks (Tinkoff Investments project) on YouTube.
According to Alexey Zabotkin, the main indicator when deciding to change the key rate will be the timing and sustainability of the slowdown in inflation, which greatly accelerated in the second half of 2023. “If we talk about the current moment, the rate of price growth in December and January has decreased slightly compared to where they were in September, October, November, but inflation expectations remain high – and even increased in some indicators at the end of last year,” – he noted.
In November 2023, Bank of Russia Chairman Elvira Nabiullina said that the regulator intends to reduce the key rate in 2024 as the inflation rate approaches 4%. In December, the Russian Ministry of Finance predicted that inflation in 2024 would be 4.5%. At the end of 2023, inflation was 7.59%.
Read more about inflation expectations of the population in the Kommersant article. “We don’t expect much from inflation”.