MOSCOW (Reuters) – Russia’s central bank is unlikely to raise its key interest rate by more than 100 basis points in December as challenges facing the economy are less dramatic than in 2014, at the height of the Crimean crisis, Governor Elvira Nabiullina said on Thursday.
The Bank of Russia has raised its key rate six times so far this year and is widely expected to hike again at its Dec. 17 meeting after inflation neared a six-year peak in November.
“In the baseline scenario, we estimate the highest increase in the key rate as 100 (basis points),” Nabiullina said at the Reuters Next conference.
Analysts polled by Reuters in late November had on average expected the central bank to raise the key rate by 50 basis points to 8% from 7.5% on Dec. 17.
Nabiullina said it would be a harmful policy mistake to underestimate inflation risks but that borrowing costs were not expected to reach double-digit levels as they did in late 2014.
A huge hike then from 10.5% to 17% came as the rouble fell to record lows and inflation accelerated after the West slapped sanctions on Russia for annexing Crimea from Ukraine.
“The current situation is of course much less dramatic than the one we had then. Still, we are very concerned with the level of inflation and inflation expectations in Russia,” Nabiullina said in an interview at the conference.
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