Interest Rate in Russia

Russia Interest Rate

Central Bank delivers emergency hike in August

At its extraordinary meeting on 15 August, the Central Bank of the Russian Federation (CBR) hiked its key policy rate by 350 basis points to 12.00%. The emergency move, which followed a 100 basis point hike on 21 July, was an attempt by the Bank to arrest the recent increase in inflation and halt the collapse of the ruble.

With its emergency move, the CBR aimed to address rising price-stability risks head-on. Although inflation rose to a relatively moderate 4.4% in early August, the Bank noted that, on an annualized seasonally adjusted basis, average inflation had shot up to 7.6% in the previous three months. This was mostly due to strong growth in domestic demand surpassing the capacity to expand output.

With regard to the exchange rates, the ruble fell to a near 17-month low of just below USD 100 per RUB on 14 August, amid jitters about Russia’s economic prospects. Western sanctions, a growing government deficit and a shrinking current account balance—due to a fall in exports revenue and rebounding imports—have all weighed on the ruble, which in turn boosted inflation.

The CBR remained hawkish in its communique, saying that “in its key rate decision-making, the Bank of Russia will take into account actual and expected inflation dynamics relative to the target and economic transformation processes, as well as the risks posed by domestic and external conditions and the reaction of financial markets.” The Bank still expects annual inflation to return to 4.0% in 2024, albeit this is likely against the backdrop of higher interest rates than previously priced in.

The majority of our panelists are evaluating the CBR’s move and adjusting their forecasts accordingly.

The Bank’s next meeting is scheduled for 15 September 2023.

Russia Interest Rate Chart

This chart displays Policy Interest Rate (%) for Russia from 2013 to 2022.

Russia Interest Rate Data

2018 2019 2020 2021 2022
Key Rate (%, eop) 7.75 6.25 4.25 8.50 7.50
10-Year Bond Yield (%, eop) 8.73 6.23 5.91 8.42 10.36

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