Russia: Inflation rises and expectations of a rate hike increase

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The inflation rate in Russia rose last May to its highest level since 2016, which reinforced expectations that the Russian Central Bank will raise interest rates strongly during its meeting scheduled for next Friday.
According to data from the Russian Federal Statistics Office released today, the consumer price index in Russia increased last month by 6% annually, while analysts who were polled by Bloomberg News Agency had expected it to rise by only 5.8%, which greatly exceeds the rate targeted by the Central Bank of 4. %.
This comes at a time when data published by the Russian Ministry of Economic Development today indicated that the country’s gross domestic product (GDP) recorded a growth of 1.8% in the period from January to April on an annual basis.
The ministry had recently reported that the gross domestic product rose in April by 10.7% on an annual basis, supported by the decline in the base year.
According to a preliminary estimate by the National Statistics Authority, Russia’s GDP contracted by 1% in the first quarter of 2021, while the GDP for 2020 is estimated to have contracted by 3%.
And Elvira Nabiullina, the governor of the Russian Central Bank, said last Thursday that all options are before the monetary policy committee meeting of the bank on June 11, including keeping interest unchanged or increasing it, adding that it is too early to talk about the possible rate of increasing interest, according to What was reported by the Russian news agency TASS.
Russia’s Interfax news agency also quoted First Deputy Governor of the Russian Central Bank, Kasina Yudaeva, as saying that maintaining interest rates is the least powerful possibility, while it is possible to increase interest rates by 25 or 50 basis points.
And Bloomberg News Agency quoted sources familiar with the discussions saying that the monetary policy board of the bank is currently inclined towards increasing the interest rate by 25 basis points, noting that the monetary policy makers in the bank change their opinion days or hours before the meeting, in light of developments.





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