Russia’s central bank announced on Friday that it hiked its policy rate by 50 basis point to 5.5% following its June policy meeting.
The USD/RUB pair edged modestly lower with the initial reaction and was last seen losing 0.22% on the day at 71.6143.
“Taking into account high inflation expectations, the balance of risks has significantly shifted towards proinflationary ones.”
“Key rate decisions will take into account actual and expected inflation dynamics relative to the target and economic developments over the forecast horizon, as well as risks posed by domestic and external conditions and the reaction of financial markets.”
Given the monetary policy stance, annual inflation will return to the Bank of Russia’s target in the second half of 2022 and will remain close to 4% further on.”
“Increased inflationary pressure in the context of the completing economic recovery can lead to a more substantial and prolonged deviation of inflation upward from the target.”
“This creates the necessity of further increases in the key rate at upcoming meetings.”