Inflation Expectations Rise in Russia

MOSCOW (Reuters) – Inflationary expectations among Russian households for the year ahead rose to 13.9% in December, the highest since the start of the year, up from 13.4% in November, according to the central bank on Wednesday.

Households’ inflationary expectations are a critical gauge for the central bank when deciding on the key interest rate. The regulator is anticipated to hike the rate by 200 basis points (bps) at a meeting on Dec. 20.

The central bank increased the benchmark rate to 21% in October, the highest level in over 20 years, citing high inflation and elevated inflationary expectations as the primary reasons for the increase.

Russia’s latest weekly data suggests that inflation shows no signs of slowing down despite the tightening measures, already exceeding the central bank’s full-year estimate of 8.5%, currently running at 8.8%.