No room for Russia to cut rates this year as inflation climbs, economy overheats
Summary
Russian key rate seen ending 2024 at 18%
Rouble to weaken to 96.1 vs dollar in 12 months
Russia's GDP growth forecast at 3.6% in 2024
Inflation expected to end 2024 at 6.9%
Aug 2 (Reuters) - Russia's central bank has no room to lower rates from 18% this year, a Reuters poll showed on Friday, with analysts forecasting inflation above the bank's 4% target in an overheating economy propelled by military production and consumer spending.
Russia's economic growth relies heavily on large-scale government spending on arms production as Moscow funds its war in Ukraine, contributing to soaring real wages in a tight labour market with unemployment at a record low.
The consensus forecast of 14 analysts polled by Reuters in late July and early August suggested the Bank of Russia's key rate (RUCBIR=ECI), opens new tab would end the year at 18%, up from 17.75% in the previous poll.
The central bank warned of economic overheating as it hiked rates to 18% last week, vowing to bring down stubborn inflation, currently running at about 9%.
https://www.reuters.com/markets/rates-bonds/no-room-russia-cut-rates-this-year-inflation-climbs-economy-overheats-2024-08-02/