The Bank of Russia has raised its key rate by 200 basis points to 21%.
“Additional budget expenditures and the associated widening of the federal budget deficit in 2024 have pro-inflationary effects. Further tightening of monetary policy is required to ensure that inflation returns to target and to reduce inflation expectations,” the Central Bank said in a statement.
The Bank of Russia does not rule out that at the next meeting, scheduled for December 20, a decision will be made to further increase the key rate.
21% is the record value of the key rate in Russian history. After the start of the full-scale invasion of Ukraine by Russian troops in February 2022, the Central Bank raised the rate to 20%, which was a record level at the time. However, already in April 2022 the rate was reduced to 17%, and by September it dropped to 7.5% and remained at that level until July 2023. From the end of July 2023, the Central Bank began to raise the rate.