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.
The bank announced its fourth successive rate hike Friday following a meeting of its rate-setting committee — an increase from the previous level of 6.5%.
The move was widely expected by economists, although most had predicted the bank could go further and raise rates to a level of 7%.
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.