MOSCOW: Russia’s central bank on Friday increased its key interest rate to 18%, marking the sixth rate hike in just over a year as it aims to combat escalating inflation.
Governor Elvira Nabiullina said that Russian businesses are grappling with rising costs and payment difficulties due to Western pressure on Russia’s trading partners to halt efforts to bypass sanctions.
Since Russia’s large-scale military offensive against Ukraine began in February 2022, domestic prices have surged, driven by massive government spending and rapidly increasing wages, which have boosted demand across the economy.
“Innovation has accelerated significantly, surpassing the Bank of Russia’s April forecast,” the central bank said in a statement. “Domestic demand continues to grow at a pace that exceeds the expansion of goods and services supply. To reduce inflation, additional tightening of monetary policy is necessary.”
The rate was previously set at 16%, and Nabiullina has indicated that further hikes may be considered.
