Russia's Central Bank Increases Key Interest Rate Amid Rising Inflation
The Central Bank of Russia has announced an increase in its key interest rate from 18 percent to 19 percent as part of its efforts to combat a recent acceleration in inflation. This decision underscores the bank's ongoing struggle to stabilize the ruble and respond to economic challenges compounded by international sanctions.
The last adjustment made by the bank was in July, where it raised the rate by 2 percentage points. This proactive approach follows a historical pattern set in February 2022, shortly after the full-scale invasion of Ukraine, when the bank raised its key rate to a staggering 20 percent. This earlier hike was aimed at stabilizing the ruble amidst Western sanctions that severely limited financial transactions involving Russian banks, individuals, and companies.
Through these measures, the Central Bank of Russia was able to stabilize the ruble and maintain relative control over its financial system. This period of high-interest rates eventually led to a relaxation of policies, with the rate dropping as low as 7.5 percent.
However, as inflation rates start to increase again, the bank has reverted to raising rates in a bid to curb inflationary pressures. The current economic climate poses significant challenges, and monitoring the central bank's actions will be crucial as they navigate these tumultuous waters. For more information on this development, refer to RFERL's original report.
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