Russia’s central bank today raised its key interest rate by another 100 basis points to 9.5%, raising its borrowing costs for the eighth time since last year, and said it was likely to raise further.
The decision of the Russian central bank was in line with the estimates of analysts in a Reuters poll, which predicted a significant increase in interest rates as inflation in the country is approaching a six-year high and the ruble has been hit hard by the crisis with Ukraine.
“If the situation develops in line with key forecasts, the Bank of Russia will keep open the possibility of further raising the key interest rate in its forthcoming meetings,” the Russian central bank said in a statement.
The ruble fell slightly to 75.05 against the dollar.
It is recalled that the central bank increased its key interest rate seven times over the previous year, with the last increase taking place in December, also by 100 basis points, raising its interest rate from a record low of 4.25% to 9 , 5% today, but failing to contain inflation that has soared to more than double the 4% target it has set.
Annual inflation climbed to 8.8% on February 4, forcing the Bank of Russia to revise its forecast for inflation at the end of the year. Now, the central bank estimates that inflation will be at the end of 2022 at 5% -6%, compared to 4% -4.5% which was its previous forecast.
The short-term risks of rising inflation have intensified due to volatility in the global market as a result of “various geopolitical events” that could affect the ruble and inflation expectations, the Bank of Russia said.
The blow to the standard of living of the Russians has prompted President Vladimir Putin to call for precautionary measures to curb rising prices.
It is noted that the next meeting of the Bank of Russia to set interest rates is scheduled for March 18.
Source: Capital
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