At a monetary policy meeting the Bank of Russia’s board of directors decided to increase the key interest rate to 8%, the Bank of Russia’s press service reported.
Since April 28, 2014 the rate has stood at 7.5% after a 0.5% upward revision. This March the Bank of Russia hiked the rate by as much as 1.5% amid an escalating conflict surrounding Ukraine and steep ruble depreciation. Meanwhile, analysts expected the Bank of Russia would abstain from revising the rate due to geopolitical tension.
The Central Bank of Russia attributes its decision to increase its key rate by 0.5% to much slower-than-expected growth of prices in the country, a related increase in inflationary risks and mounting geopolitical uncertainty. As the regulator specified, the key rate was raised in order to lower inflation to 4% over the medium term.
The Bank of Russia’s board of directors will meet next time on September 12, 2014.
