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The Central Bank of Russia raised the interest rate by 100 basis points this Friday, to 13%, the highest rate since May 2022. in response to the weakening of the ruble.
The Russian central bank made this decision at its regular meeting after raising the interest rate by 350 basis points at an emergency meeting on August 15. up to 12% due to the sharp devaluation of the ruble.
The monetary entity chaired by Elvira Nabiúlina explained that “important pro-inflationary risksdue to the growth of domestic demand exceeding the capacity to expand production and due to the depreciation of the ruble during the summer.”
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In this scenario, in the last three months the inflation rate was 9.9% in seasonally adjusted annualized terms, while core inflation (inflation that excludes food and energy because they are more volatile) rose to 8.4%.
The Russian bank maintained that the high demand for imports, together with the reduction in exports, “is a key factor in the devaluation of the ruble from the beginning of 2023“.
“Therefore, it is necessary to further tighten monetary conditions to limit the upward deviation of inflation from the target and return it to 4% in 2024,” the central bank indicated.
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The Bank of Russia argued that the decision to increase the interest rate by 100 basis points “will accelerate the formation of monetary conditions necessary to ensure balanced credit growth” and trends to reduce inflationary pressures in the Russian economy. Immediately after the announcement of the Russian institution, The ruble fell slightly against the dollar and the euro.
On the Moscow Stock Exchange, the exchange rate was 96.58 rubles per dollar, 28 cents more than before the monetary decision, while the euro rose to 102.96 rubles per euro. 26 cents more.
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Nabiúlina had already announced that she did not rule out raising the interest rate again, while Russian President Vladimir Putin denied on monday “sudden movements” of the State to support the ruble.
After a sharp devaluation at the start of the Russian war in Ukraine in February 2022 (exceeding 104 rubles per dollar on average in March), the Russian currency recovered thanks to the intervention of the Bank of Russia. However, at the beginning of August it began to lose value sharply, once again exceeding the barrier of 100 rubles per dollar.
Source: Observadora
