Russia’s central bank on Friday raised its benchmark rate by a percentage point to 13%, a month after imposing an even bigger hike, as concerns about inflation persist and the ruble continues to struggle the dollar.
The increase comes as annualized inflation rose in September to 5.5 percent and the bank said it expected it to reach 6 to 7 percent by the end of the year. year.
“Inflationary pressure in the Russian economy remains high. Significant pro-inflationary risks have crystallized, namely growth in domestic demand exceeding the capacity for expansion of production and depreciation of the ruble during the summer months,” said the board of directors of the bank in a press release. “It is therefore necessary to further tighten monetary conditions. »
In August, the bank raised the interest rate to 12 percent, a jump of 3.5 percentage points, as the ruble fell to 100 against the dollar. Even though the ruble exchange rate has improved slightly after the rate hike, it remains around 95 per dollar, significantly weaker than a year ago, when it traded around 60 per dollar American.
The central bank is trying to combat rising prices as Russia imports more and exports less, particularly oil and natural gas, with rising defense spending and sanctions looming large. Importing more and exporting less means a smaller trade surplus, which generally weighs on a country’s currency.
(Edited by : Sangam Singh)
First publication: September 15, 2023 6:02 p.m. STI