At the monetary policy meeting on October 26, the CBR noted that short-term inflation risks remained elevated. The annual rate of consumer price inflation was 3.4 % in September. The CBR also said it expected the inflation rate to climb to around 4 % p.a. by the end of this year and slightly exceed 5 % by the end of 2019. One-off factors such as the VAT hike at the start of next year may accelerate inflation. Under the CBR’s forecast, inflation should subside to the long-term target level of 4 % in the first half of 2020.
The overnight interbank market rate (MIACR) closely tracks the CBR’s key rate. The rate on ruble-denominated loans to corporations granted by banks (excluding Sberbank) averaged about 170 basis points above the CBR’s key rate in January-August. The average rate on corporate loans in August was slightly below 9 % (slightly below 6 % in real terms)