Large Rate Hikes at the Central Bank of Russia and National Bank of Belarus
February 28, 2022
Today’s huge increase in the Central Bank of Russia’s policy interest rate from 9.5% to a 20-year high of 20.0% was the second increase this month following a percentage point high in the 11th. In a wide-ranging statement, Governor Nabiullina opens with acknowledging
The conditions for the Russian economy have altered dramatically. The new sanctions imposed by foreign states have entailed a considerable increase in the ruble exchange rate and limited the opportunities for Russia to use its gold and foreign currency reserves.
The Governor then lists numerous actions taken today intended to “to maintain financial and price stability, support the Russian financial sector, and protect the welfare of citizens and the economy in general.”
Russia was not the only central bank to raise its policy interest rate today. The other country involved was Russia’s ally, Belarus, where the National Bank’s refinancing rate was hiked 275 basis points to 12.0%, its highest level since mid-October 2017. On-year CPI inflation of 10.4% in Belarus of 10.4% is roughly double the central bank’s medium-term target. The policy rate hike today follows a single 75-basis point increase engineered in April 2021. The rate earlier in the pandemic had been at a record low of 7.5%.
Copyright 2022, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
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