The Russian Central Bank extended a pause in rate hikes that had been in place since December, with policymakers keeping the benchmark rate at 16% for the fourth straight meeting on Friday, according to Jinshi. Central Bank Governor Elvira Nabiullina has become more hawkish as economic growth, local demand and price increases have consistently exceeded expectations.
The central bank said in a May report that slowing inflation requires cooling demand, which means tight monetary conditions will need to be maintained for a prolonged period. The central bank said further tightening may be needed "if the slowdown in inflation does not resume in the coming months."
There are signs that Russian consumer activity is slowing, with annual retail sales growth falling to 8.3% in April from 11.1% in March. However, labor shortages are becoming more serious as unemployment has fallen to a record low of 2.6%. Inflation has also risen sharply over the past two months, with price growth accelerating for four consecutive weeks to an annual rate of more than 8%, more than double the central bank's 4% target.
