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Russia’s Central bank made a significant move on Friday by raising its key interest rate to 21%, citing higher than expected consumer price increases and ongoing Inflation risks in the medium term. This hike of 200 basis points surpasses analysts’ expectations and marks the highest benchmark rate since February 2003. The bank mentioned the possibility of further rate hikes at the next meeting in December.
Annual Inflation reached 9.8% in September, up from 7.5% in August, with projections indicating a range of 8.0–8.5% by the end of 2024. The bank highlighted risks related to high Inflation expectations, imbalanced economic growth, and worsening foreign trade conditions. It anticipates a decline in Inflation to 4.5–5.0% in 2025 and 4.0% in 2026.
Russia’s economy has been negatively impacted by low global oil prices, Western sanctions, and depreciation of the ruble. Concerns have been raised about potential economic growth constraints due to the interest rate hikes, especially as the European Central bank and the U.S. Federal Reserve are easing monetary policy.
The International Monetary Fund forecasts Russia’s Inflation to average 7.9% this year, with a decline in GDP growth expected in the coming years.
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Lucas Bennett, completed his Finance degree at Bocconi University in Italy in 2018. He is highly skilled in corporate finance and risk management, beginning his career at a hedge fund in Milan. Lucas expertise extends to consulting for leading European firms, particularly within the energy markets sector. His analytical skills and strategic mindset have made him a sought-after consultant, and he continues to explore new opportunities within the financial services industry across Europe.
