Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Russia raises key rate to 5.5%, flags more hikes to curb inflation

EconomyJun 11, 2021 10:41AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. FILE PHOTO: A woman sells fruit and vegetables in a street in the far northern city of Vorkuta, Russia September 16, 2018. Picture taken September 16, 2018. REUTERS/Eduard Korniyenko

By Andrey Ostroukh

MOSCOW (Reuters) -Russia's central bank raised its key interest rate by 50 basis points to 5.5% on Friday and said more hikes would be needed to rein in high inflation.

After slashing the rate to a record low of 4.25% last year during the COVID-19 pandemic, the central bank has now raised it three times in 2021 to slow inflation that shot above its target in November and is on track to accelerate further.

"Our main task is to normalise the price growth rates," Governor Elvira Nabiullina said.

She said the board had considered an even bigger rise of 75 or 100 basis points and that another rate hike was highly probable when they next meet on July 23.

Analysts polled by Reuters had forecast the key rate would rise from 5% to 5.5%, its highest since April 2020.

The rise in borrowing costs came after annual consumer inflation, the central bank's main area of responsibility, overshot expectations and accelerated to 6% in May, a level not seen since October 2016 when the key rate was at 10%.

The central bank, which has warned inflation is set to speed up further, said increased inflationary pressures pointed to "the necessity of further increases in the key rate at the upcoming meetings".

It said inflation had climbed to 6.15% as of June 7 and would only return to target in the second half of 2022, later than expected.

"Another 50 bp rate hike at the next policy meeting ... appears very probable, after which the CBR may opt to take a pause to evaluate how this year's aggressive rate-hiking is sifting through the economy," Citi said in a note.

"Based on the wording, the range of the most likely key rate ceiling for this year has shifted from 5.5-6.0% to 6.0-6.5%," ING analysts said.

Inflation expectations among Russians have reached a four-year high with the pace of economic growth exceeding expectations.

The rouble, which has been battered recently by a new wave of Western sanctions, firmed to 71.55 against the dollar after the rate announcement, its strongest since July.

Russia raises key rate to 5.5%, flags more hikes to curb inflation
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email