Russia seen holding interest rates throughout 2021
- The consensus forecast of 20 analysts and economists polled in late February suggested the central bank would hold its benchmark rate at 4.25% throughout 2021. Forecasts for the year-end ranged from 4.0% to 5.5%.
- Analysts forecast inflation would rise to 5.3% in the first quarter of 2021 before gradually slowing below the 4% target to 3.8% by the end of the year.
MOSCOW: The Russian central bank is expected to take a wait-and-see stance and hold its key interest rate throughout 2021 as the economy returns to growth and inflation gradually slows, a Reuters poll showed on Friday.
Russia slashed rates to a record low in 2020 amid the COVID-19 pandemic and a drop in oil prices. But as inflation has accelerated due to the rouble weakening, the central bank declared the end to its monetary easing cycle.
The consensus forecast of 20 analysts and economists polled in late February suggested the central bank would hold its benchmark rate at 4.25% throughout 2021. Forecasts for the year-end ranged from 4.0% to 5.5%.
The previous poll from late January also predicted no changes to the key rate this year.
But unlike a month ago, when experts forecast the rate would also stay at 4.25% in 2022, this poll showed the central bank is expected to raise the rate to 4.50% in the second quarter of 2022 and to 4.75% in the third quarter.
Analysts forecast inflation would rise to 5.3% in the first quarter of 2021 before gradually slowing below the 4% target to 3.8% by the end of the year, the poll showed.
The commodity-dependent economy is expected to expand by 2.9% in 2021, down from the 3.1% forecast in the previous poll.
In 2020, the economy shrank by 3.1%, suffering its sharpest contraction in 11 years as it took a hit from lower prices for Russia's exports and coronavirus-related lockdowns.
The poll also showed the rouble's outlook was largely unchanged. The rouble was expected to trade at 71.72 to the dollar and 88.54 to the euro 12 months from now versus 71.80 and 89.65, respectively, in the previous poll.
Geopolitical risks have plagued the rouble in recent weeks, keeping it much weaker than in early 2020 when oil prices hovered near current levels.
On Friday official exchange rates, set by the central bank, were 73.48 per dollar and 89.50 per euro.
Most of the forecasts in the Reuters poll were based on at least 10 individual projections.
Comments
Comments are closed for this article.