By Alexander Marrow
(Reuters) – Russia’s central bank will keep interest rates on hold at 7.5% next week as inflation remains above target, boosting the country’s economy for a second straight year Remaining steady A Reuters poll on Tuesday showed 2023 contracting.
Since Moscow sent tens of thousands of troops to Ukraine in February, Russia’s economic landscape has changed dramatically 13, triggering The West imposed comprehensive restrictions on Russia’s energy and financial industries, and dozens of leading companies withdrew from the market.
Initial expectations of a 72 double-digit recession proved overblown, but analysts expect Russia’s economic health to continue to deteriorate, with domestic production expected to Gross value (GDP) will fall by 2%, while 2022 is expected to slip by 2.5%.
The average opinion of 17 analysts and economists polled at the end of January indicated that the Bank of Russia will keep its key interest rate at 7.5% February 10 board meeting as it tries to bring inflation back to the 4% target.
Inflation expectations, a key gauge the central bank is watching closely ahead of the meeting, fell to 10.6% in January, but still high. The central bank said it sees risks to inflation rising this year.
Analysts’ forecast for a 2% drop in GDP this year contrasts sharply with that of the International Monetary Fund (IMF), which said on Tuesday that Russia’s economy would grow by 0.3%.
The average forecast of the polls has the ruble trading at 2022. One year from now against the dollar, vs what analysts had predicted earlier 72 .24 Exchange rates compared to this month. The official exchange rate for Tuesday is 59.24 rubles to one dollar.
Analysts at Rosbank Research said, “Negative sentiment prevails in the foreign exchange space at the moment, which increases the possibility of a weaker ruble in the short term.”
Rosban “Continuing geopolitical pressures and concerns about the consequences of oil product price caps are at play,” Grae added.
The central bank is expected to gradually lower the key interest rate to 7.10% by the end of the year, forecasts range from 6.24% to 8.%, polls show, compared to 7% in the last poll.
Annual inflation is expected to hit 5.8% this year, the same as the previous survey and well below last year’s double-digit rise.
Most forecasts in Reuters poll are based at least on 10 personal forecasts.
