The Central Bank of Russia announced on Friday that it raised its policy rate by 25 basis points to 6.75% from 6.5%, compared to the market expectation for an increase of 50 basis points, as reported by Reuters.
Key takeaways from policy statement
"Given the monetary policy stance, annual inflation will edge down to 4.0-4.5% in 2022 and will remain close to 4% further on."
"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 and the reaction of financial markets."
"If the situation develops in line with the baseline forecast, the Bank of Russia holds open the prospect of further key rate rises at its upcoming meetings."
"According to the Bank of Russia’s forecast, annual inflation will begin to slow down in the last quarter of 2021."
"The Bank of Russia’s monetary policy stance is aimed to limit this risk and return inflation to 4%."
Market reaction
With the initial market reaction, the USD/RUB pair edged modestly higher and was last seen trading at 72.8170, where it was still down 0.2% on the day.
