Russia’s Central Bank hiked interest rates on Friday for the first time in 16 months, as Moscow’s spending on its invasion of Ukraine and sharp falls in the value of the ruble have triggered fresh concerns over inflation.
The regulator raised its key rate from 7.5% to 8.5%, it said in a statement.
The move is the Central Bank’s first interest rate rise since four days after the invasion of Ukraine, when it hiked rates to 20% in an emergency decision as it scrambled to stabilize the Russian economy.
Throughout 2023, Governor Elvira Nabiullina has warned about bubbling inflationary pressures due to rapid government spending and a steep devaluation in the value of the Russian ruble — which pushes up the price of goods bought from abroad, or those made with imported components.
On Friday, the Bank said there was “persistent inflationary pressure in the economy” that mean its 4% inflation target would not be hit this year.
“Inflationary pressure is on the rise. Current price growth rates, including a variety of underlying indicators, have exceeded 4% in annualized terms and are still increasing,” the Bank said in a statement.
