Alexey Vedev forecasts a rise in the Central Bank’s key rate

“I think that it is highly likely that the Central Bank will raise the key rate. Absolutely hawkish sentiments in the Central Bank; there is a high probability of an increase. This is explained by the fact that inflation is not slowing down, but accelerating. No outlook for a slowdown yet. I do not expect a reduction in the key rate this year. If a reduction occurs, it will only be meant to stimulate the economy because a slowdown in growth rates is very likely, and therefore the Central Bank may agree to this.

To reduce inflation, demand must decrease, while currently demand is pushing inflation up. The ruble exchange rate should be more or less stable for 3-4 months. However, everyone says that the strengthening of the ruble is temporary and is waiting for it to reach 90. This also accelerates inflation. The key rate, in my view, has virtually no effect. Over the past 10 months, the Central Bank has repeatedly increased the key rate, but inflation is accelerating. Enterprises still take out loans, more expensive ones, factor them into production costs and pass them on to consumers through rising prices.”