Moscow, Russia: Russia’s central bank cut its key interest rate by 300 basis points for the third time since an emergency rate hike in late February, citing cooling inflation and a recovering ruble.
Kirill Kudryavtsev | AFP | Getty Images
Russia’s central bank unexpectedly kept its key interest rate unchanged at 21% on Friday, citing improved monetary tightening conditions, creating conditions for curbing high inflation.
“Monetary conditions have tightened more sharply than expected at the key interest rate decision in October,” the bank said. explainpointing out the “autonomous” factor in monetary policy.
“Given the significant rise in borrower interest rates and cooling of credit activity, the tightening of monetary conditions creates the necessary prerequisites to resume the deflationary process and bring inflation back to target, despite currently higher price growth and higher domestic demand,” it added.
The central bank is widely expected to raise interest rates by 200 basis points on Friday, following a move in October as Russia struggled to contain the military costs of Moscow’s invasion of Ukraine and Western sanctions on its key commodities. Inflation.
The bank said on Friday it would assess the need for a key rate hike at its upcoming February meeting. Annual inflation is currently forecast to fall to 4% in 2026 and remain at that target going forward.
Russia’s consumer price index is now more than double that level – with annual inflation at 9.5% as of December 16, the bank said on Friday, noting persistent pressures, particularly in households and businesses field. The consumer price index rose 8.9% year-on-year in November, up from 8.5% in October. This increase was mainly driven by higher food prices, As milk and dairy prices soar This year.
Rates remained unchanged even as Russian President Vladimir Putin admitted on Thursday at his annual question-and-answer session with Russian citizens. The country’s inflation is problematic And there is evidence that the economy is overheating. However, he emphasized that Russia can still achieve economic growth of 3.9%-4% this year.
“Of course, inflation is an alarming sign. Just yesterday, as I was preparing for today’s event, I spoke to the President of the Central Bank, Elvira (Nabiullina), and he told me that the inflation rate is already at 9.3 % or so. comments, he said.
This breaking news story is being updated.
