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VTB expects Central Bank key rate to drop to 5-5.5% in 2023

VTB is anticipating the key rate of the Russian Central Bank to grow by 1 percentage point, followed by a decrease to 7-7.5% by the end of 2022 and further to 5-5.5% in 2023, as announced by the head of the bank Andrei Kostin.

" We think that the key rate might increase by about 1 percentage point, up to 8.5% to be precise, in the first quarter of 2022 at the latest. After that, however, we expect it to decrease by the end of next year, down to about 7-7.5%. In 2023 it might further decrease down to about 5-5.5% because we are expecting that by the end of next year, we will approach 4% or perhaps even 4.5% inflation rate targeting. So, the whole situation with inflation will be put under control«, said Kostin in a Russia 24 channel interview.

Earlier on the sidelines of the «RUSSIA CALLING!» forum Elvira Nabiullina, the head of the regulator, claimed that in December, the Central Bank will consider decisions on the key rate, ranging from keeping it at 7.5% per annum to increasing it by 1 percentage point. However, added Nabiullina, keeping the key rate unchanged is the most unlikely scenario.

In spring the Central Bank moved to normalize its monetary policy by starting to raise its key rate. The main arguments were a more rapid economic recovery and high inflation, which reached 8.13% as of October in annual terms. The regulator raised the rate by 0.75 percentage points in the spring, by 1.5 percentage points in the summer, and by one more percentage point in autumn, bringing it to 7.5% per annum. Meanwhile, annual inflation slowed to 8.05% as of November 22.