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In the quarterly Monetary Policy Report, the Bank of Russia presents its view and assessment of the current economic situation and publishes the macroeconomic forecast underlying its key rate decisions.

Inflation is slowing down.
The 2022 forecast has been
lowered to 12-15%

This year’s GDP
decline will not be
so profound

Lower key rate
will make loans
more affordable

Monetary policy aims
to return inflation
to the target in 2024


Inflation is declining

Prices have been declining almost continuously for nine weeks. The slowdown in annual inflation is mainly driven by temporary factors, such as price adjustments following the March spike and a stronger ruble. Indicators reflecting the most sustainable price movements are still above 4% (annualised). A more pronounced disinflationary effect comes from the savings behaviour of households, which curbs consumer demand. Inflation expectations of households and businesses are decreasing. This year’s inflation forecast has been lowered to 12-15%.

Inflation, households’ inflation expectations and key rate

Sources: Bank of Russia, Rosstat.

This year’s GDP decline will not be so profound

The decline in economic activity is taking place more slowly than expected in April. A more favourable export performance in the first half of the year, as well as stabilising consumer activity and additional government sending, are driving a higher path for external and domestic demand. According to the updated forecast, the GDP decline in 2022 will be less deep. Yet, the impact of supply-side shocks may be more extended over time.

Key forecast parameters

2022 2023 2024
Annual inflation 8.4 12.0  15.0 5.0  7.0 4.0
Gross domestic product 4.7 (-6.0)  (-4.0) (-4.0)  (-1.0) 1.5  2.5
— % change, Q4 on Q4 of the previous year 5.0 (-12.0)  (-8.5) 1.0  2.5 1.0  2.0
Exports 3.5 (-17.0)  (-13.0) (-12.5)  (-8.5) (-1.0)  (+1.0)
Imports 16.9 (-31.5)  (-27.5) (-1.5)  (+2.5) 2.5  4.5
Banking system’s claims on the economy in rubles and foreign currency, including: 13.9 10  13  14
● on businesses 10.7 5  10 12  13
● on households, including: 22.0 5  10 14 14
— housing mortgage loans 26.7 13  18 10  15 10  15

Source: Bank of Russia.

Monetary conditions continue to ease, but still generally remain tight, in part given a decline in inflation expectations

Interest rates in the credit and deposit market, as well as short- and medium-term OFZ yields, continued to decline. Yields on long-term bonds did not change significantly. Lending activity slightly picked up, though remained moderate. Non-price lending conditions, which have become increasingly tight over recent months, and a high risk premium continue to play an important role. At the same time, the portion of current accounts, being the most liquid part of savings, is growing in the structure of households’ savings with banks. Once sentiment changes, these accounts may be rapidly re-routed to spending, thereby elevating proinflationary risks.

Key rate and monetary indicators


Monetary policy aims to return inflation to the target in 2024

The future key rate path will depend on how the balance of risks for achieving the inflation target level in 2024 is shaped. Monetary policy also takes into account the need for a structural transformation of the economy. According to the baseline forecast, the annual average key rate will be 10.5-10.8% p.a. in 2022 (this is consistent with the average value in the range of 7.4-8.0% until the end of the year), 6.5-8.5% p.a. in 2023, and 6.0-7.0% p.a. in 2024.

Average annual key rate and its forecast, % p.a.

Moving forward, in its key rate decision-making, the Bank of Russia will take into account actual and expected inflation dynamics relative to the target and economic transformation processes, as well as risks posed by domestic and external conditions and the reaction of financial markets. The Bank of Russia will consider the necessity of key rate reduction in the second half of 2022.
Department responsible for publication: Monetary Policy Department
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Last updated on: 22.11.2023