Central Bank of Russia Hikes Interest Rate Further

July 23, 2021

The Central Bank of Russia’s policy interest rates was raised today for a full percentage point to 6.5%, which more than reversed last year’s entire easing from 6.25% to 4.25%. Along with increases of 25 basis points in March, 50 bps in April, 75 bps in May and 50 bps in June, the Russian central bank rate has climbed 225 basis points in all this year, as officials respond to above-target inflation (6.5% as of June versus a goal of 4.0%). A released statement, moreover, promises more monetary restraint if necessary in coming months. Expected inflation has risen, too, and officials concede that it probably will take longer than imagined for inflation to return to target. GDP is back to pre-pandemic levels, but a faster spread domestically of Covid creates some uncertainty.

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

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