The Central Bank raised the key rate at once by 75 BP, up to 7.5%

The Central Bank decided to increase the key rate by 0.75 percentage points, to 7.5%. The decision should have reflected a difficult search by the balance sheet regulator in the context of acceleration of inflation and fears for economic growth due to covid restrictions announced in the country. By its decision, the Central Bank emphasized the fight against inflation.

The Board of Directors of the Central Bank raised the key rate for the sixth time in a row. Improving the rate by 75 b.p. It turned out to be above the expectations of analysts.

The Central Bank substantiated it by the fact that inflation is “much higher” of the forecast - now, according to the results of 2021, the regulator expects it in the range of 7.4–7.9%. Prior to this, the Central Bank was counting on annual inflation in the range of 5.7–6.2%. The expectations of the average rate for 2022 in the forecast of the Central Bank are significantly increased - up to 7.3–8.3% compared with 6.0–7.0% in the previous forecast.

In 2022, the Central Bank counts on inflation in the basic scenario not at 4.0%, as before, but at 4.0–4.5%. The regulator is stipulated that "the predominant influence of the dialogue factors can lead to a more significant and prolonged deviation of upward inflation from the target."

The Central Bank admits that the current inflation is inflation of demand in the context of a proposal restriction. The regulator predicts GDP growth in 2021 by 4.0–4.5%, and in 2022–2024 - by 2.0–3.0% annually. This is at the level or lower than the budget forecast of the Ministry of Economic Development.

The Central Bank stated that “in conditions of tightening anti -epidemic measures ” “restrictions on the part of the proposal” may intensify in a number of industries. A complex epidemic environment restrains the restoration of the service sector.

With the development of the situation, in accordance with the basic forecast, the Central Bank allows the possibility of further increase in the key rate at the nearest meetings. The next meeting at the rate will be held on December 17.

• At the beginning of this week, the economists were sure that the Central Bank would raise the key rate at once at 50 basic points, to 7.25%. The acceleration of inflation in September to 7.4% in annual terms was pushed to such an increase in the Central Bank. The main economist "Expert RA" Anton Tabakh in a conversation with The Bell acknowledged - the inflation situation is developing according to a poor scenario. And on Wednesday evening, Rosstat published inflation data for a week by October 18: 0.22% in weekly expression and about 7.8% in annual. The MMI telegram channel, founded by the current director of the Department of Monetary Policy of the Central Bank, Kirill Tremasov, called these numbers “disaster” and changed his forecast for an increase of +50 b.p.

• After the country's authorities announced the regime of non-working days, and in Moscow they introduced the Lokdown for business, the forecast of most economists at the rate was softened : according to Bloomberg consensus, most analysts began to expect an increase by only 25 B.P. “The Central Bank turned out to be between Scylla and Haribda,” said Natalia Orlova, chief economist of Alfa Bank, Bloomberg. The fact that the fact that appeared, really had to affect the rate of raising the rate, predicted Bloomberg economist Sova Capital Artem Zaigrin.

• On the decision of the Central Bank, the dollar fell shortly down below 70 rubles for the first time since the summer of 2020.