Russia hikes rate to 7.5% in battle to tame inflation, signals further rise

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Russia hikes rate to 7.5% in battle to tame inflation, signals further rise

On Friday, the Central Bank of Russia had raised its overnight lending cost by 75 bps (basis percentage point), hiking interest rates for the sixth time this year while topping an analysts’ estimate by a wider margin as the pandemic-rampaged economy’s inflation had spiked to a 7.8 per cent as of October 18.

Aside from that, Russ Central Bank was quoted saying in a statement that further rate-hikes in a near term might be on the card to tackle a sky-scrapping inflation while raising 2022 average rate forecasts, flaring up a rally in Russian Rouble that gained as much as 1.18 per cent on Friday against its American counterpart to 70.31 Rouble per Dollar.

In point of fact, latest unprecedented move from the Russian Central Bank to aggressively perk up its benchmark borrowing cost came forth as the bank was looking to roll back its benchmark inflation to a target range below 4.0 per cent.

Global money markets were anticipating a rate-hike by 50 bps following a rate-hike of 25 bps in September.

Russian Central Bank aggressively raises interest rate to 7.5%

Meanwhile, addressing to a much-required ease in gravitational pull in interest rates in order to tame a soaring inflation amid a rapid rise in pandemic cases across the nation with most Russ nationals seemed reluctant to take a jab against the pandemic pathogen, Russian Central Bank Governor, Elvira Nabiullina said, “This is a significant increase and, obviously, this is not a fine-tuning exercise”.

Apart from that, confirming a rate-hike of 75 bps this month that followed an increase in interest rate by 25 bps in September, Nabiullina was also quoted saying that the Central Bank policymakers had been brewing off an option to a 100 bps rate-hike, but had settled down on 75 bps, while possibilities of future rate-hikes in a near term could not be ruled out.