Russian Bank Interest Rates. Russian Central Bank Raise Interest Rates Russia’s central bank raised its benchmark interest rate by 350 basis points (bps) to 12 percent on Tuesday (15/8/2023), an emergency move to stop the ruble from weakening. The move comes as the ruble has crossed 100 to the US dollar, following calls from the Kremlin for tighter monetary policy.
The extraordinary encounter came after the ruble plunged past the 100 threshold against the dollar on Monday, dragged down by the impact of Western sanctions on Russia’s trade balance and by soaring military spending.
President Vladimir Putin’s economic adviser Maxim Oreshkin rebuked the central bank and blamed “soft monetary policy” for the ruble’s weakness. Hours after Oreshkin’s rebuke, as the ruble hit 102 to the dollar, the central bank announced an emergency meeting to strengthen its currency.
The Russian central bank last made an emergency rate hike at the end of February 2022, with an increase of 20 percent as a direct result of Russia’s shipment to Ukraine. Then steadily lowered borrowing costs to 7.5 percent, as intense inflationary pressures eased in the second half of 2022.
Since the last cut in September 2022, the Russian central bank has kept rates on hold but increased its hawkish rhetoric, eventually rising 100 bps to 8.5 percent at its last scheduled meeting, July 2023.
Russia is experiencing double-digit inflation in 2022. After experiencing a slowdown in the spring 2023 high base effect, annual inflation is now again exceeding the central bank’s target of 4 percent and rising.
Russian Bank Interest Rates. The Russian central bank also said that on a seasonally adjusted annual basis, current price growth over the last three months has averaged 7.6 percent.