Russia’s central bank raised its key interest rate by 100 basis points to 13 percent on Friday, raising borrowing costs for the third straight session in response to a weaker ruble and other persistent inflationary pressures.
“The Bank of Russia will consider the need for further increases in key interest rates at its upcoming meetings,” the bank said in a statement on Friday.
The central bank raised interest rates by 350 basis points to 12 percent at an emergency meeting a month ago, responding to the ruble’s fall of more than 100 against the dollar and the Kremlin’s public call for tighter monetary policy.
The bank’s decision to raise interest rates on Friday was in line with analysts’ forecasts in a Reuters poll.
Russia had gradually reversed an emergency hike to 20% it had taken in February 2022 after sending Russian troops to Ukraine and the West leading to sweeping Western sanctions against Moscow, taking rates to 7.5% this year.
But as the ruble’s sharp weakening fueled inflationary pressures from a “tight” labor market, strong consumer demand and the Russian state’s wide budget deficit, the central bank was forced into a new tightening cycle that began in late July.
The central bank adjusted its year-end inflation forecast to a range of 6%-7% from 5%-6.5%. Yearly inflation stood at 5.33% on September 11, above the bank’s target of 4%.
The next rate-setting meeting is scheduled for October 27.
Source : Capital.gr