Russia’s Central Bank on Friday raised its key interest rate from 18% to 19%, a widely anticipated move as the country struggles to cool down inflation amid soaring military spending for the war in Ukraine.
By the end of 2024, annual inflation is likely to exceed the July forecast range of 6.5–7.0%,” the bank said in a statement.
“Growth in domestic demand is still significantly outstripping the capabilities to expand the supply of goods and services.”
For that reason, the bank explained, “further tightening of monetary policy is required” so that the government can reach its inflation target of 4%.
While stating that inflation was likely to exceed its previous forecast for 2024, it said it still expects inflation to drop to 4-4.5% in 2025 before nearing the target rate.
Russia’s Central Bank last increased interest rates in July when it hiked the key rate from 16% to 18%.
So, too, has defense spending soared as Moscow ramps up arms production for the war in Ukraine. »
