Analysts expect the key rate to rise to 9.5%

The Central Bank will raise the key rate in February by another 1 p.p. – up to 9.5%, follows from the Izvestia consensus poll. 9 out of 16 polled analysts from the largest Russian banks spoke in favor of such a scenario.

The main reason for this decision is the continued rise in prices, explained Igor Rapokhin, senior debt market strategist at SberCIB Investment Research: as in December, when the Central Bank raised the rate by 1 percentage point, there are still no signs of a slowdown in inflation. According to Rosstat, as of January 28, 2022, price growth in Russia accelerated to 8.8% after 8.4% in November-December, updating a six-year high. At the same time, the target of the Central Bank for this indicator is 4%.

“In order to contain price growth and return inflation to the target level of 4%, the Bank of Russia will make loans to the economy more expensive and cool consumer and investment demand. Following the key rate, other rates in the economy will also grow by a comparable amount, including rates on deposits, as well as on consumer and mortgage loans,” Mikhail Vasiliev, chief analyst at Sovcombank, expects.

Inflation has once again overtaken the key level, Denis Popov, chief analyst at PSB, stated, explaining that with a small step in raising the rate, the Bank of Russia will again be forced to catch up with price growth in March. The regulator already tried this tactic last year, hoping for a reversal of the inflationary trend, and it did not work, the expert recalled. At the same time, shock growth is the key one – by more than 1 p.p. – it won’t, even in view of geopolitical tensions, Sergey Konygin, senior economist at Sinara investment bank (SKB-Bank), is convinced.

Read more in the exclusive Izvestia article:

February evolution: analysts expect the key rate to rise to 9.5%