Russian Central Bank raises forecast for average key rate for 2023-2026, expects range of 15%-15.2% until end of 2023

MOSCOW. Oct 27 (Interfax) - The Central Bank of Russia (CBR) has raised its forecast for the trajectory of the key rate for 2023-2026 after hiking it sharply by 200 basis points to 15% per annum following the meeting of the regulator's board of directors on Friday.

The key rate should average within the range of 15%-15.2% from October 30 until the end of 2023 according to the CBR's updated macroeconomic forecast

The regulator has raised its outlook for the average rate overall to 9.9% for 2023 from 9.6%-9.7%.

The CBR has also raised expectations for the average key rate to 12.5%-14.5% for 2024 from 11.5%-12.5%, to 7%-9% for 2025 from 7%-8%, and to 6%-7% for 2026 from 5.5%-6.5%, with the latter assessed as a neutral level.

The CBR's board of directors on Friday decided to hike the key rate sharply by 200 bps to 15% pa, thus exceeding the consensus forecast of analysts, who had projected a rise of 100 bps to 14% pa.

The CBR has introduced an inflation range of 4%-4.5% for 2024, thereby allowing for inflation to exceed the target next year, and the regulator has raised its inflation outlook to 7%-7.5% for 2023 from 6%-7%.