It is extremely difficult to give concrete forecastsElvira Nabioullina said in a speech devoted to the central bank maintaining its key rate at 20%, three weeks after the start of the Russian offensive in Ukraine which led to Russia suffering many devastating sanctions.
Inflation will be this year and probably next year higher than previous forecastsshe limited herself to predicting.
GDP will fall in the next quartershe added, indicating that she planned to present new forecasts
A little earlier, theBCR announced in a press release to maintain its key rate at 20% after having raised it sharply on February 28.
In late February, we raised the policy rate primarily to address financial stability risks amid unprecedented new sanctions inflicted on Russia, said Ms. Nabiullina.
What is the situation today? The banking system is functioning flawlessly, the liquidity situation has stabilizedshe explained.
For a while, inflation will remain high, but we will not allow an inflationary spiral to developshe assured.
The acceleration of inflation at the end of February at the beginning of March was caused by an increase in demand, mainly in the non-food sectorexplained Ms. Nabioullina.
People actively purchased household appliances, cars, electronics, furniture, fearing that these products would no longer be available due to the imposed sanctions.
The head of the central bank also observed an increase in the consumption of cereals, flour, pasta and sugar.
We have enough stocks, the production of these commodities continuesshe assured.
Purchase of bonds
The key rate is the main tool for fighting inflation.
On February 28, four days after the entry of Russian troops into Ukraine, theBCR raised its rate from 9.5% to 20% to deal with the economic sanctions decreed by the West against Moscow.
It also imposed drastic measures on the purchase of currencies to slow down the fall of the ruble and keeps the Moscow Stock Exchange closed to avoid seeing it collapse. But half of its reserves, about $300 billion, have been frozen as part of the sanctions.
Ms. Nabiullina said that bond trading would resume on the Moscow Stock Exchange on Monday, and that the Bank of Russia would buy bonds issued by the Russian state, in order to counter volatility in this market.
The next meeting of the Central Bank’s Board of Directors will be held on April 29.