09 June 2024, Russia, Moskau: A guardhouse of the Kremlin (l) and the Foreign Ministry (M, background) stand in the center of the capital. Photo: Ulf Mauder/dpa (Photo by Ulf Mauder/picture alliance via Getty Images)
Picture Alliance | Picture Alliance | Getty Images
Russia’s central bank on Friday raised its key interest rate by 200 basis points to 21%, citing consumer price increases┬аconsiderably above its forecast┬аand warning of ongoing high inflation risks in the medium term.
The move exceeds the 100 basis-point hike expected by analysts and brings the institution’s benchmark rate to its highest since February 2003, according to Reuters. The key rate was previously taken up by 100 basis points to 19% in September.
On Friday, the central bank noted annual seasonally adjusted inflation hit an average of 9.8% in September, up from 7.5% in August. It now anticipates the print will sit in a 8.0тАУ8.5%┬аrange by┬аthe┬аend┬аof┬а2024 тАФ and is running “considerable above” a July forecast of near 6.5-7.0%.
“Over the┬аmedium-term horizon,┬аthe┬аbalance of┬аinflation risks┬аis┬аstill significantly tilted to┬аthe┬аupside,” the bank said in a statement. “The┬аkey┬аrisks are┬аassociated with persistently high inflation expectations and┬аthe┬аupward deviation of┬аthe┬аRussian economy from a┬аbalanced growth path, as┬аwell as┬аwith a┬аdeterioration in┬аforeign trade conditions.”
Russia’s economy has been constrained by depressed global prices for its key oil exports and by Western sanctions following Moscow’s invasion of Ukraine, leading to declines in the ruble.
This breaking news story is being updated.
