Central Bank Rate Hike to 19% in Russia – Currency Thoughts

Central Bank Rate Hike to 19% in Russia

September 13, 2024

Officials at the Central Bank of Russia face an altogether different set of circumstances due to President Putin’s attempt to restore the Russian Empire. CPI inflation has reaccelerated from 2.3% in April 2023 to a 13-month high of 9.1%. After the latest review of policy, officials released a statement today than announces a two percentage point hike in the central bank interest rate to 19.0%. That’s just below the 20% peak held briefly after Russian initially invaded Ukraine early in 2022 and up from the 7.5% level that prevailed from September 2022 until July 2023. The CBR statement depicts a classic demand-pull inflation with cost-push augmentation as wages outpace productivity growth. There is additional evidence of rising inflation expectations. The previous inflation forecast for 2024 appears likely to be exceeded, and a return to the 4.0% medium-term target is not likely to occur until some time well into 2025.

Copyright 2024, Larry Greenberg. All rights reserved. No secondary distribution without express permission.

Tags: Central Bank of Russia

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