At an unscheduled meeting, the Bank of Russia raised the key rate from 8.5% to 12%. As follows from the message of the regulator, the decision to increase was made by the Board of Directors in order to limit the risks to price stability.
Following the results of the previous meeting on July 21, the rate was set at 8.5% per annum. Prior to that, it has not changed since September 2022. In February 2022, the Central Bank unscheduledly raised the rate from 9.5% to 20% per annum.
The regulator justified the decision by increasing inflationary pressure. According to the regulator, the annual inflation rate increased to 4.4%, while the current rate of price growth continues to accelerate. Domestic demand has exceeded the possibilities of expanding production in the country and is now affecting the ruble through an increase in imports. The rate increase is aimed at “ensuring the dynamics of monetary conditions and domestic demand in general, which are necessary to return inflation to 4% in 2024 and stabilize it near 4% in the future,” the Central Bank said in a press release.
However, the ruble reacted with a fall to the decision of the Central Bank – the dollar is traded at the level of 98.59 rubles on the Moscow Exchange – an increase of more than 2 rubles half an hour after the statement of the Central Bank, according to the data of the trading platform.
It should be noted that the convening of an unscheduled meeting was preceded by a significant weakening of the ruble, which on August 14 overcame 101 against the US dollar. The Central Bank stated that the situation with the exchange rate does not pose a threat to financial stability, but on the same day they nevertheless announced the convening of an unscheduled board of directors. The Central Bank has repeatedly stressed that they do not target the ruble exchange rate.
Source: Rosbalt
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