Sumary of Russia’s Central Bank Hikes Rates Once More in Inflation Battle:
- Russia’s Central Bank has hiked interest rates to 6.75% in its ongoing battle to tame soaring inflation, which threatens to undermine the country’s economic recovery in the wake of the coronavirus pandemic.
- Inflation in Russia accelerated to its highest level in five years over the summer, with prices rising at an annual rate of 6.7%, stoking public discontent and concern inside the Kremlin following eight years of declining or stagnating living standards.
- Surveys show Russian households’ estimates of inflation — one of the Central Bank’s most closely watched indicators — are far above the level of price rises recorded by official statistics.
- The bank fears this risks creating a dangerous inflationary spiral, where Russians move up purchases to avoid being caught out by expected price rises in the future, thus pushing up demand and exacerbating the situation.
- Independent economists say $7 billion in pre-election giveaways from President Vladimir Putin — designed to whip up support for the ruling United Russia party ahead of parliamentary polls next week — have also complicated the country’s battle with rising prices.
- Russia’s official target is to maintain inflation of around 4%.