Russia’s Central Bank Makes Surprise 0.25% Deposit Interest Rate Rise
Whilst Monday represented a public holiday for many countries, Russia took the opportunity to raise its deposit interest rates unexpectedly by 0.25% to 3.5% in attempt to curb inflation.
In a statement, Russia’s Central Bank said that the new deposit rate would come into effect Tuesday, while the other rates including the benchmark refinancing rate would stay the same. The decision was taken by the bank to address inflation worries“and risks for sustainable growth”, according to the statement.
The announcement surprised many analysts after the Central Bank chief Sergei Ignatyev said just last week that the bank was “in no hurry” to raise rates. Inflation did ease a little in May but was still at 9.7% which is a significant level higher than the government’s target of 7%.
This latest move comes after the Central Bank raised its refinancing rate by 0.25% from 8% to 8.25% in April. The deposit rate increase is designed to effect Russia’s broader economy. Ignatyev spoke to the Russian news agencies on Monday telling them that the decision to lift the ban on grain exports is the only potential threat to the bank’s efforts to combat inflation.