MOSCOW: U.S. tariff hikes may slow down world economic growth and fuel inflation, and oil prices could be lower than forecast for several years as a result of reduced global demand, the Russian central bank said on Wednesday.
President Donald Trump was set to impose sweeping new tariffs on Wednesday as he proclaimed “Liberation Day” in the U.S., escalating a trade war with global partners, risking cost increases and upending a decades-old trade order.
“The increase in import duties in the USA and the retaliatory measures by other countries have raised the risks of a slowdown in global economic growth and an acceleration of inflation,” the Russian regulator said.
“Expectations of lower global demand are already putting pressure on prices in commodity markets. The risks that oil prices in the coming years will be lower than the February baseline forecast have somewhat increased,” it added.
The remarks, published on Wednesday, were made at its latest board meeting on March 21. Participants in the meeting also said that inflationary pressure had decreased due to lower domestic demand and a stronger rouble, but that it remained high.
Russia holds key rate at 21% as inflationary pressure remains high
The rouble is up by around 25% against the U.S. dollar since the start of the year. The central bank said the rally could be linked to the easing of tensions between Russia and the United States.
“The strengthening of the rouble could have occurred due to increased interest in Russian assets amid an improvement in the geopolitical situation. This interest might have been driven by a higher key interest rate in Russia compared to rates in other countries,” it said.
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