Half Percentage Point Central Bank Interest Rate Hike in Russia

June 11, 2021

 

A third successive hike of the Central Bank of Russia has been engineered, and its 50-basis point increase to 5.5% exceeded forecasts of a 25-basis point move. The rate had been raised by 50 basis points in April and 75 bps in May. A statement from the Board of Directors after the scheduled policy review affirms that “inflation is developing above the Bank of Russia‚Äôs forecast” and implies that more tightening may yet be needed: “Increased inflationary pressure in the context of the completing economic recovery can lead to a more substantial and prolonged deviation of inflation upward from the target. This creates the necessity of further increases in the key rate at upcoming meetings.” CPI inflation accelerated half a percentage point in May to 6.0%, and officials seek to bring such down to 4% by the second half of next year.

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

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