MOSCOW (Reuters) – Inflation in Russia continues to accelerate and a return to the central bank’s 4% target may require additional monetary policy tightening, according to a review by central bank analysts published on Tuesday.
In September, annual inflation rose to 6.0% from 5.2% in August, boosted in part by the weakness of the rouble. As of Oct. 9, it stood at 6.3%.
While the economy ministry forecasts 2.3% growth next year, the Bank of Russia’s forecast range is 0.5-1.5%, in line with International Monetary Fund expectations.
“The return of inflation to target under stimulative fiscal policy in 2024 may require additional tightening of monetary policy,” the central bank analysts said.
The bank has already said that a policy meeting on Oct. 27 will discuss the possibility of a further hike in its key lending rate from the current level of 13%.
The hikes agreed in July-September have not yet led to a slowdown in inflation, but will do so in the coming months, the analysts said.
According to the bank, the Russian economy gained momentum in September, partly due to an increase in exporters’ rouble revenues as the rouble weakened.
Economists have said soaring military spending may help Russia’s economy in the short-term, but that its long-term prospects are bleak, especially as areas like schools and healthcare face effective spending freezes in the years ahead.
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