Russia: central bank raises rates cautiously, cost of money now at 6.75%

The Russian central bank has taken action on interest rates. At today’s meeting, Russia’s central bank decided to raise the benchmark interest rate by 25 basis points, bringing it from 6.5% to 6.75 percent. The market was expecting a rate hike to 7 percent.

“In the second quarter of 2021, the Russian economy reached its pre-pandemic level and, according to the Bank of Russia estimates, is returning to a balanced growth path – reads the statement -. The contribution of persistent factors to inflation remains high on the back of faster demand growth relative to production expansion capacity. Against this backdrop, taking into account high inflation expectations, the balance of inflation risks is tilted upwards. “