Following the ruble’s plummet to a more than 16-month low against the dollar on Tuesday, Russia’s central bank increased its benchmark interest rate from 8.5 to 12 percent.
“This decision was taken in order to limit the risks to price stability,” the central bank said, after convening for an extraordinary meeting earlier in the day.
It warned that inflationary pressure was still rising, and said the bank risked missing its inflation target in 2024 if prices continued to increase at their current rate.
“The Bank of Russia will make further decisions on the key rate, taking into account the actual and expected inflation dynamics relative to the target,” it said.
The bank’s main rate will be up for discussion again on September 15.
Since the beginning of the year, the ruble has lost about 30% of its value versus the dollar as Moscow struggles with declining export revenues, rising imports, and increased military spending.
Despite the bank’s tightening of monetary policy, inflation has also remained persistently high, with consumer prices climbing 4.3% on an annual basis in July.
Following the rate announcement, the ruble weakened against the dollar, falling to 96.83 at 10:48 local time (07:48 GMT), according to data from the Moscow Exchange.
On Monday the currency fell to over 100 rubles to the dollar, as one Kremlin aide publicly criticised “loose monetary policy” in an op-ed published in state media.
The decline in the ruble and creeping inflation has prompted fears ordinary Russians’ standard of living could take a hit.
