Russia, December 27 (Reuters) – According to Deputy Governor Alexei Zabotkin in an interview with the RBC daily, the Bank of Russia may hike interest rates in 2023 if inflationary factors like labor shortages and import restrictions have a substantial impact.
At its final meeting of the year on December 16, the bank kept its benchmark interest rate at 7.5%. Still, it somewhat changed its tone to acknowledge increased inflation concerns, claiming that a recent military mobilization was causing a further labor shortage.
There is agreement that if a rate increase is required to keep inflation at 4% by 2024, we will do it, Zabotkin said in an interview with RBC released on Tuesday.
High expectations for inflation, a labor shortage, logistical limitations, the trajectory of the fiscal deficit being more significant than expected, and deteriorating external conditions were all mentioned as threats by the speaker.
Together, these pro-inflationary factors make up a sizable bouquet, according to Zabotkin. Accordingly, these circumstances will determine the need to raise rates in whatever order and to whatever extent they manifest themselves by 2023.
Furthermore, according to Zabotkin, the fundamental change that Russia’s economy is going through is a process that takes longer than a typical cyclical downturn. We will reach the level of 2021 sometime in 2025, he predicted, if the economy grows in a range near the high end of our base prediction from last October.
The central bank will have little room to decrease interest rates in 2023, according to a Reuters poll conducted last week, as inflation is expected to continue over the goal.
- Published By Team Genuine Reporter