Russian Central Bank increases interest rate to 18 percent amid rising inflation, trade challenges
Date
7/28/2024 5:40:17 AM
(MENAFN) On Friday, Russia's central bank raised its key interest rate to 18 percent, marking the sixth increase in just over a year as it attempts to curb rising prices. Central Bank Governor Elvira Nabiullina explained that Russian companies are grappling with increasing costs and payment difficulties, exacerbated by Western pressure on Russia's trading partners to stop aiding in sanction circumvention.
Since the onset of the war in Ukraine in February 2022, prices in Russia have surged. This inflation has been fueled by substantial government spending and high wages, which have driven up demand across all sectors of the economy. The Russian central bank acknowledged in a statement that inflation is accelerating at a rate much higher than their April forecast. They noted that the growth in domestic demand continues to outstrip the economy's capacity to supply goods and services, necessitating further tightening of monetary policy to bring inflation under control.
Prior to this latest adjustment, the key interest rate stood at 16 percent. Governor Nabiullina indicated that additional rate hikes could be on the horizon. She also highlighted signs of economic "exhaustion" and pointed out that ongoing trade difficulties are contributing to the rising inflationary pressures.
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