Russia may suspend or slow down the interest rate cutting cycle this week. The reason is increased inflation risks and the threat of tax increases due to Ukraine's attacks on Russian oil refineries, UNN reports with reference to Bloomberg.
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Despite the Russian economy suffering from high borrowing costs, which the central bank led by Elvira Nabiullina only began to lower in June, economists are expressing caution. Approximately half of them predict a reduction in the key rate from the current level of 17%, while the rest do not foresee any changes.
The central bank is expected to announce its decision at 1:30 PM Moscow time, with a briefing to follow at 3:00 PM.
Andrey Melashchenko, chief economist at Moscow-based Renaissance Capital, believes that the central bank will either leave rates unchanged or act more cautiously, lowering them by half a percentage point after a one percentage point cut in September.
At the same time, the situation in Russia's fuel market remains unstable due to the Kremlin's unwillingness to negotiate and Ukrainian strikes on oil refineries in response to Russian shelling of Ukraine, which leads to numerous casualties.
Gasoline prices jumped 3% in September and rose another 2% this month.