Central Bank of Russia hikes policy rate by 50 basis points to 5% in April

Russia’s central bank announced on Friday that it hiked its policy rate by 50 basis point to 5%, compared to analysts' estimate for an increase of 25  |  23/04/2021 11:37

Russia’s central bank announced on Friday that it hiked its policy rate by 50 basis point to 5%, compared to analysts' estimate for an increase of 25 basis points.

Market reaction

With the initial market reaction, the USD/RUB pair pushed lower and was last seen losing 0.7% on a daily basis at 71.9000.

Key takeaways from policy statement as summarized by Reuters

"Will consider the necessity of further increases in the key rate at its upcoming meetings."

"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.

"Given the monetary policy stance, annual inflation will return to the Bank of Russia's target in the middle of 2022 and will remain close to 4% further on."

"Consumer price growth rates, as well as inflation expectations of households and businesses, remain elevated."

"The recovery of demand is becoming increasingly steady and in certain sectors exceeds their output expansion capacity."

"The Bank of Russia’s inflation forecast for 2021 has been increased to 4.7–5.2%."

"The rapid recovery of demand and elevated inflationary pressure call for an earlier return to neutral monetary policy."

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