The Bank of Russia does not intend to lower the key rate in the coming months, the Bank's press service informed.
Today, on March 14, the Bank of Russia Board of Directors decided to maintain the Bank of Russia key rate at 7%.
High inflation risks that brought about an increase in the key rate on 3 March 2014 still remain. Unstable external conditions and a rise in financial market volatility are conducive to an increase in economic uncertainty, the statement points out.
Against this backdrop the Bank of Russia’s priority is to contain the effect of exchange rate dynamics on inflation and to maintain financial stability. The global economy continues to recover slowly. Persistently weak economic growth in most of Russia’s trading partners curbs demand for exports from Russia and restrains the domestic economy. Meanwhile, oil prices remain at high levels. External inflation is stable and does not exert a noticeable influence on domestic prices, the Central Bank of Russia points out.
Russian economy continues to slow down. Industrial production is stagnating. Investment activity remains low amid economic uncertainty, declining profits in the real sector and tightened non-price lending conditions. Consumer demand is still the major driver of economic growth. It is supported by still high growth in retail lending. However, a decline in consumer activity is observed against the backdrop of a slower real wages growth and of a deteriorating consumer sentiment. The aggregate output of goods and services remains somewhat below potential.
The next regular meeting of the Bank of Russia Board of Directors, where the key rate level will be considered, is scheduled for 25 April 2014