ROMA – The Central Bank of Russia in an extraordinary meeting of the Board of Directors decided to increase rates by 15 basis points, bringing them to 12% from the previous 8.5% per annum. A decision taken to bring inflation back to 4% in 2024, explains the Russian news agency ‘Tass’. But widely expected, given that the ruble plunged yesterday, reaching an all-time low in the dollar exchange rate. In fact, yesterday the Russian currency, exhausted by sanctions and by the war, exceeded the psychological threshold of 100 for a dollar (compared to 60 pre-conflict), reaching 101 in the middle of the session (and 111 against the euro),
“The Board of Directors of the Bank of Russia has decided to raise the key rate by 15 basis points from August 2023 350 to 12.00% per annum. This decision was taken in order to limit the risks to price stability”, explains the Central Bank in a note, noting that the decision is aimed at guaranteeing such dynamics of monetary conditions and domestic demand in general, which are necessary to bring inflation back to 4% in 2024 and stabilize it close to 4% in the future.
A very substantial increase, which may not be the last: the central bank announces that “it will take further key decisions on rates based on the trend in inflation dynamics”. In the event of an increase in inflationary risks, “a further increase in the reference rate is possible”.