Bank of Russia Tightens Unexpectedly

March 19, 2021

The Central Bank of Russia became the third monetary authority this week to raise its key interest rate in response to accelerating and above-target inflation, but unlike the tighenings in Brazil and Turkey which were merely larger than anticipated, Russia’s hike to 4.5% from 4.25% had not been expected. A statement from the Board of Directors, moreover, asserts that “the Bank of Russia holds open the prospect of further increases in the key rate at its upcoming meetings.” CPI¬† inflation last month of 5.7% in Russia was at a 51-month high and well above the target of 4%. Indicators of expected inflation are also rising, and economic recovery is broadening and deepening, aided by fiscal support. In addition to Russia, Turkey, and Brazil, central banks in Kyrgyzstan, Ukraine, and Zambia have also raised there interest rates this quarter.

Copyright 2021, Larry Greenberg. All rights reserved. No secondary distribution without express permission.

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