Russia raises interest rates again to combat inflation and the decline in the value of the ruble
Russia decided to raise the main interest rate from 13 to 15% for the fourth time in a row within three months to confront inflation and the decline in the value of the ruble, according to what the Central Bank announced on Friday.
“The current inflationary pressures have clearly increased to reach a level higher than the expectations of the Bank of Russia,” the bank said in a statement.
He added, “Therefore, it’s necessary to tighten monetary policy again, with the aim of reducing the level of inflation from 6% currently to 4% in 2024”.
This decision comes the day after representatives of the Russian Parliament approved, on Thursday, an increase in military expenditures for the year 2024, by 6% within a year.
The costs of the war in Ukraine continue to weigh heavily on Russian public finances and the economy.
Under the impact of sanctions, the decline in the value of the ruble in recent months and the return of inflation have been accompanied by the fear of many Russians about damage to their purchasing power.
This situation is due in particular to the apparent decline in revenues from fuel sales under the influence of sanctions, and the insistence of European Union countries to get rid of dependence on Moscow in the field of energy.
The Central Bank had previously raised the interest rate in July from 7.5 to 8.5%, then to 12% urgently in mid-August in the face of the collapse of the value of the ruble, before raising it again to 13% in September.
But these measures didn’t lead to the desired result, as the value of the ruble is still low against the dollar and the Euro.
On Friday, it was equivalent to 92.6 rubles to US dollar, and 97.8 to Euro, which are levels close to those recorded in March 2022, after the outbreak of war in Ukraine.
In light of these difficult circumstances, the Central Bank had expected economic growth to slow in the second quarter of this year, but on Friday it indicated faster growth than expected in September.
While he revised his expectations for a rise in inflation from 7 to 7.5%.
