Russia raises benchmark borrowing cost to 6.5% in the steepest move since 2014



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Russia raises benchmark borrowing cost to 6.5% in the steepest move since 2014

On Friday, Russian Central Bank had raised its benchmark borrowing cost to 6.5 per cent, largely aimed at putting the kibosh on a sky-scrapping inflation, while Russ Central Bank Governor Elvira Nabiullina also had hinted that further rate hikes might be on the card following the latest 100 basis point increase in key interest rate which happened to be the steepest since 2014.

In point of fact, Russia’s Central Bank had curbed its interest rate to 4.25 per cent last year in a bid to ease the impacts of pandemic associated fiscal fallouts, however, Russia this year had ventured into a tightening up of monetary policy to curb a soaring inflation ahead of September’s parliamentary election.

Besides, speaking in the presentation that introduced a 100-bps rate hike on Friday, Russ Central Bank Governor Nabiullina had said that that Reserve Bank had also been mulling a 50 to 75 bps rate-hike in a near term to drag inflation down to its target of 4 per cent.

Russia’s Central Bank hikes rate by 100-bps to 6.5 per cent

Alongside this, latest move from the Russia’s Central Bank came forth shortly after Government data had unveiled that the country’s annual inflation had blown past estimates to 6.5 per cent in June, the highest level since the August of 2016, when the country’s inflation had soared to an eye-propping 10.5 per cent.

Meanwhile, adding that the Russian Central Bank had raised the country’s annual growth forecast between 4.0 to 4.5 per cent for fiscal 2021, above a prior estimate between 3.0 to 4.0 per cent, the Central Bank said in a statement, “If the situation develops in line with the baseline forecast, the Bank of Russia will consider the necessity of (a) further key rate increase at its upcoming meetings.

Nevertheless, Central Bank Governor Nabiullina was quoted saying that the Friday’s move to introduce a stiffer monetary policy would not impact the former G8 (Group of 8) nation’s economic growth.