Russian central bank surprises markets by holding key rate at 21%
MOSCOW, Russia: The Russian central bank has cut its key interest rate by 300 basis points for a third time since its emergency hike in late February, citing cooling inflation and a recovery in the ruble.
KIRILL Kudryavtsev | AFP | Getty Images
Russia’s central bank on Friday unexpectedly left its key interest rates unchanged at 21%, citing improved monetary tightness that had created the conditions to tame sky-high inflation.
“Monetary conditions tightened more significantly than envisaged by the October key rate decision,” the bank said, noting factors “autonomous” from its monetary policy.
“Given the notable increase in interest rates for borrowers and the cooling of credit activity, the achieved tightness of monetary conditions creates the necessary prerequisites for resuming disinflation processes and returning inflation to the target, despite the elevated current price growth and high domestic demand,” it added.
Markets had widely expected the central bank to hike interest rates by another 200 basis on Friday, after taking such a step in October amid an ongoing effort to subdue inflation stoked by the military costs of Moscow’s invasion of Ukraine and by Western sanctions against its key commodity exports.
Russia’s consumer price index hit 8.9% in November on an annual basis, up from 8.5% in October. The increase was largely driven by rising food prices, with the cost of milk and dairy products soaring this year.
This breaking news story is being updated.
