Central Bank evaluated tight monetary policy scenarios 13:33

At the April meeting on the Bank of Russia’s key interest rate, opinions were divided: Some experts suggested keeping it at 16%, others suggested increasing it to 17%. This is stated in the published statement. summary From the Central Bank.

Proponents of tightening have cited the possibility of a slowdown in the decline in inflation and the inertia of government spending in the face of higher interest rates. The majority agree: The summary states that new pro-inflationary risks require a further cooling of the economy.

Supporters of maintaining the interest rate stated that inflation was falling, the effect of previous interest rate increases was not fully reflected, and the expiration of concessional housing loans at 8% would slow down price growth. They acknowledged that the economy’s potential was above Central Bank forecasts due to productivity growth, meaning overheating was less than expected.

However, the risks of accelerating inflation in the coming months justified this tough position. Reasons: Staff shortages and large-scale budget expenditures increase wages and demand. Overheating of the economy may be more serious than previously thought. Additionally, government spending responds poorly to the interest rate; hence a significant increase is needed. The neutral rate level is higher than the current level of 6-7%.

The Central Bank allows two scenarios: An interest rate cut in the second half of the year, or an increase in interest rates as the tension in the labor market increases and consumption, investment and loans accelerate.

“A temporary slowdown in inflation towards 4.5% in March was offset by higher consumer demand and rising debt burdens. Market services are rapidly becoming more expensive,” explained Central Bank Deputy Governor Alexey Zabotkin.

Before that experts developed Assessment of GDP dynamics of Russia in the coming years.

Previously at the Central Bank said How is deposit interest calculated?