The building of the Central Bank of the Russian Federation

© REUTERS/Maxim Zmeyev

MOSCOW, July 27. /TASS/. The Central Bank kept its key rate at 7.25%, according to the regulator the results of the Board of Directors.

“Although annual inflation remains below the target, a trend is developing its return to 4%, said the Central Bank. – The balance of risks shifted in the direction proinflationary risks. Uncertainty remains as to the extent of the impact of tax measures on inflation expectations and the uncertainty of the external environment”.

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“The Bank of Russia will make decisions on the key rate, assessing the risk of inflation, inflation dynamics and the development of the economy relative to forecast. The Bank of Russia considers as the most probable transition to a neutral monetary policy in 2019”, – stated in the message controller .

The decision was expected: on the eve of the vast majority of analysts predicted saving rates in anticipation of the reaction of business to the future increase in VAT and against the background of rising inflation expectations. In June, the inflation expectations of the Russians rose to a maximum in the autumn – to 9.8% versus 8.2% in may, mainly due to the cost of gasoline. According to economists, the regulator will keep a pause in further monetary easing until at least the end of this year.

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In mid-June, Central Bank head Elvira Nabiullina noted that the probability of a transition to a neutral monetary policy in 2018, as the Bank of Russia had initially planned, is strongly reduced. However, it is not excluded the transition to a neutral monetary-credit policy in the current year.

The message of the regulator it is specified that the scheduled tax and budget changes will require some degree of rigidity of monetary conditions. “Given the impact of planned fiscal measures on inflation and inflation expectations will need some degree of rigidity of monetary conditions to limit the extent of the spillovers and to stabilize annual inflation near 4% at the forecast horizon,” – noted in a press release.

The next meeting of the Board of Directors of the Bank of Russia, which will address the issue of the level of the key rate, scheduled for September 14, 2018.