Russia’s Central Bank has decided to raise the key interest rate by 350 basis points to 12 percent, it said in a statement Tuesday.
During an emergency meeting, the bank announced the rate increase and said the decision was “aimed at limiting price stability risks” amid inflation pressure.
“As of Aug. 7, the annual rate of inflation rose to 4.4 percent while current price growth rates continue to increase,” the bank said in a statement.
According to the bank, steady growth in domestic demand has surpassed the capacity to expand production, increasing inflationary pressure and influencing the ruble’s exchange rate dynamics through elevated demand for imports.
“Consequently, the pass-through of the ruble’s depreciation to prices is gaining momentum, and inflation expectations are rising,” it said.
The bank said the current decision would help bring inflation back to 4 percent in 2024, adding that the next key interest rate meeting would be held on Sept. 15, 2023.
According to the Russian Ministry of Economic Development, the annual growth rate of consumer prices will continue to accelerate, exceeding the Central Bank’s target of 4 percent, to reach 4.4 percent at the end of August, compared to 4.2 percent as of July 24.
The ruble weakened to 101 against the U.S. dollar on Monday and stayed at 98 on Tuesday.
