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The Russian Central Bank raised on Friday interest rates Home 200 basis points to 15% from 13%, exceeding expectations due to continued fears of a rise in… InflationAnd to curb the decline in value Ruble In currency markets.
The Monetary Policy Committee of the Russian Central Bank decided to increase the main interest rate today, Friday, which is the fourth consecutive interest increase in 3 months, raising interest rates to their highest levels since April 2022.
The central bank appears to be giving the ruble’s stability against the dollar a priority to rein in inflation as the Russian president prepares Vladimir Putin To run in the presidential elections next March.
The central bank said that additional tightening of monetary policy is needed to limit the rise in the inflation rate from the 6% level and return it to the target level of 4% next year. The bank did not indicate whether it intends to increase interest rates again at its next meeting.
The bank added that current inflation pressures are increasing significantly to reach the highest levels it expects, at the same time the ruble continued to rise against the dollar after the announcement of the decision to increase Russian interest rates.
The Russian Central Bank’s decision comes the day after representatives of the Russian Parliament approved yesterday, Thursday, an increase in military expenditures for the year 2024, by 6% within a year.
The costs of the war in Ukraine continue to weigh heavily on Russian public finances and the economy. Under the impact of sanctions, the decline in the value of the ruble in recent months and the return of inflation have been accompanied by the fear of many Russians about damage to their purchasing power.
Protection of the ruble
The Central Bank had previously raised the interest rate last July from 7.5% to 8.5%, then to 12% urgently in mid-August in the face of the collapse of the value of the ruble, before raising it again to 13% last September.
However, the value of the ruble remains low against the dollar and the euro. On Friday, it was equivalent to 92.6 rubles to one dollar, and 97.8 to one euro, which are levels close to those recorded in March 2022, after the outbreak of war in Ukraine.
In light of these difficult circumstances, the Central Bank had expected economic growth to slow in the second quarter of this year, but on Friday it indicated faster growth than expected last September. While he revised his expectations for a rise in inflation from 7% to 7.5%.
