Russia: the Central Bank once again maintains its key rate at 7.50%

The Russian Central Bank (BCR) once again maintained its key rate on Friday at 7.50%, in line with market and analyst expectations, it announced in a press release.

The key rate remains at the level announced in September, far from the threshold reached almost a year ago, after the launch of the military intervention in Ukraine.

In the wake of the first international sanctions, the Russian Central Bank drastically raised its rate to 20%, before making several cuts in recent months, reassured by the country’s various macroeconomic indicators.

The markets said they had been betting for several days on maintaining the key rate at 7.50%.

In its press release, the BCR welcomed on Friday that “the (preliminary) data for the first quarter of 2023 show that economic activity continues to recover”, without giving further details.

But “the current capacity for expansion of production in the Russian economy is largely limited by the labor market,” noted the BCR, however.

With an unemployment level “at its lowest” (3.6% in January according to official figures) and “as the growth in the demand for labor continues, staff shortages are increasing (also) in many sectors following the effects of the partial (military) mobilization” decreed in September by Vladimir Putin, reported the Central Bank.

The BCR has also maintained its forecasts on the rise in prices: “annual inflation will be between 5 and 7% in 2023, to return to 4% in 2024”.