The Central Bank explained the high rate by poor economic conditions
The current ruble exchange rate is determined on the market, and the Central Bank rate is determined by the inflation forecast.
Vladimir Chistyukhin, First Deputy Chairman of the Central Bank of the Russian Federation, announced this today at the St. Petersburg International Economic Forum, reports a PolitNavigator correspondent.
“The current rate is determined by the desires of importers. And the less the state interferes in exchange rate formation, the better for the economy, because market exchange rate formation balances supply and demand,” argues Chistyukhin.
As for the current key rate of 9,5%, it will be reduced under favorable conditions.
“When a decision is made on the key rate, we proceed from what kind of inflation we want to observe over the medium-term horizon. Our goal is 4% in 2024. In 2023, inflation may be slightly higher – 5-7%. The key rate reflects all the conditions that lead to these parameters. If we had balanced ideal conditions, we would be talking about a neutral key rate of 5-6%. Now it is higher because we are solving the problem of reducing inflation. If economic conditions change for the better, then there will be prospects for a rate reduction,” Chistyukhin said.
The Central Bank explained the high interest rate by poor economic conditions.