MOSCOW: The population's interest in bank deposits is growing, and the Bank of Russia's decision to raise the key rate will help ...
MOSCOW: The population's interest in bank deposits is growing, and the Bank of Russia's decision to raise the key rate will help boost savings activity, head of the Bank of Russia, Elvira Nabiullina, said at a press conference following a meeting of the regulator's board of directors.
She reiterated that the regulator remains committed to the inflation target of 4%. Nabiullina added that a tighter monetary policy will be needed to curb price growth.
TASS has assembled the key statements by the head of the Bank of Russia.
On key rate
The Bank of Russia allows for the possibility of an additional increase in the key rate at a meeting in December.
"The possibility of raising it in the same way in the future will depend on the data that we receive," Nabiullina said.
The population's interest in bank deposits is growing, and today's decision to raise the key rate "will boost savings activity."
Raising the inflation forecast for 2024 "does not mean that the key rate is not working."
A steady decline in inflation will be a signal to start cutting the key rate, but it is difficult to say when this will happen. "We cannot say it now," the head of the regulator said.
According to Nabiullina, a high key rate "has a much greater impact on reducing inflation than it slows down the pace of economic growth."
The Bank of Russia expects to reach a neutral range of the key rate of 7.5-8.5% by 2027.
On inflation
The Bank of Russia is not observing any signs of a slowdown in inflation.
The regulator remains committed to the inflation target of 4%, expecting to achieve it in the first half of 2026.
To achieve the inflation target, the Bank of Russia will "react even in more conservative way" to emerging risks.
On price growth
To curb the accelerated growth in prices, "significantly greater monetary policy strictness" will be required.
The rate of price growth in the coming months will be "additionally affected by the increase in the recycling fee."
On labor market
Tension on the Russian labor market remains, "the problem of labor shortages has even worsened."
The unemployment rate in August 2024 remained "close to the all-time low of 2.5% adjusted for seasonal factor," while wage growth continued to outpace labor productivity growth.
On economic forecast
The Bank of Russia does not include the risk of economic recession in its forecast.
"A recession is about the economy as a whole, not about individual sectors, and GDP is growing in our forecast. Therefore, we do not include the risk of recession in the forecast," Nabiullina said.
On demand for Russian goods
The regulator noted "more moderate dynamics of external demand for Russian export goods."
On lending rates
The Bank of Russia recorded a decrease in the monthly growth rate of banks' retail loan portfolio compared to May and June.
On housing and preferential mortgages
The demand for housing will be "more balanced" under the influence of the cancellation of mass preferential mortgages. Russians have started buying housing more often with their personal savings, "this can be seen from how escrow accounts are filling up," the head of the regulator noted.
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