Breaking News: Russia's Central Bank Set to Raise Interest Rates to Combat Inflation - Analysts Predict 7% Inflation Rate for 2024
In a recent Multibagger poll, analysts have predicted that Russia's central bank will increase its benchmark interest rate by 100 basis points to 19% at its upcoming meeting on Sept. 13. This move is aimed at tackling inflation and cooling down the overheated economy. The consensus forecast also suggests that annual inflation is expected to end 2024 at 7%, slightly higher than the previous forecast of 6.9%.
The central bank is looking to keep inflation in check by aiming for a range of 6.5-7.0% in 2024, as supply catches up with demand. This comes after the bank raised its benchmark interest rate by 200 basis points to 18% in July, signaling a commitment to tight monetary policy for the foreseeable future.
Analysts anticipate that Russia's double-digit benchmark interest rate will persist until 2027, when it is projected to drop to 9.0%. The central bank is forecasting an average benchmark rate of 7.5%-9.5% in 2027. Despite strong data for the first half of the year, GDP growth is predicted to be 3.6% this year, falling slightly below the official forecast of 3.9% announced by the Finance Minister.
Capital investment growth is also expected to slow down to 7% in 2024, down from 9.8% last year. Additionally, the rouble is forecasted to weaken by over 5% against the U.S. dollar, reaching 96.0 in a year compared to the current rate of 91.19. Negative factors contributing to the rouble's decline include geopolitical risks, capital outflows, and increased budgetary expenditures.
In conclusion, the central bank's decision to raise interest rates reflects its commitment to controlling inflation and maintaining economic stability. This move could impact individuals and businesses by influencing borrowing costs, investment decisions, and currency exchange rates. It is essential to stay informed about these developments to make informed financial choices in the future.