Monetary Policy Hold Maintains 7.5 Percent Rate Amid Inflation Vigilance
The policy rate remains at 7.5 percent after the board’s February 10 meeting, marking the third straight decision holding this level. This rate has been in place since September 16, 2022, with the overall policy stance and market expectations staying aligned around a careful path for inflation and growth.
Inflation pressures are easing gradually but still present. Prices continue to rise, though the underlying components show moderation in their sustainable pace. Consumers and businesses have adjusted expectations downward, signaling growing confidence in the medium-term inflation trajectory. Economic activity has shown resilience, performing better than earlier projections. Households remain cautious in spending, yet early indicators point to a modest revival in consumer activity. In announcing the decision, the central bank noted that faster growth in budget outlays, tougher foreign trade conditions, and a tighter labor market have contributed to higher pro-inflation risks.
The central bank will keep monitoring actual and expected inflation against the policy target, alongside ongoing economic restructuring and risks from domestic and global conditions. It also flagged the potential impact of evolving financial conditions. As inflation risks persist, the bank will assess the feasibility of adjusting the key rate at future meetings when warranted by inflation trends and the broader economic outlook.
Market observers had anticipated a hold at the February 10 session, aligning with the prevailing consensus in financial markets.
Analysts from SberCIB Investment Research noted that January inflation came in lower year over year, with monthly increases in the range of 0.7 percent to 0.8 percent. Core price indicators, which include temporary factors, have softened and remain below a four percent pace, supporting a cautious stance on policy tightening for the near term.
One strategist suggested that given these trends, a rate increase at the February 10 meeting appeared unlikely. Another assessment from Sovcombank’s chief analyst indicated that pro-inflationary pressures have risen since the last policy meeting in December, implying limited room for a rate cut at this point.
On currency dynamics, the ruble softened against the dollar, moving from about 65 to roughly 70 per U.S. dollar. Brent crude prices firmed in regional markets, while pressure on the Urals oil discount widened amid sanctions. A larger budget deficit projection for 2022, estimated at about 3.2 trillion rubles, exceeded expectations and influenced the period’s price movements.
The central bank’s stance has shifted through time. The tightening phase began at 4.25 percent in March 2021, rising to a peak near 20 percent by March 2022. The bank then began easing, trimming the rate by 12.5 percentage points from March 18 to September 16, returning to 7.5 percent. The rate has remained unchanged through the following meetings in October and December, signaling a measured approach to policy amid ongoing economic adjustment.