Russian Central Bank Holds Key Rate at 14%
Policymakers said rising fuel costs, driven by Ukrainian drone attacks on oil refineries, are making it difficult for them to tame inflation.
On Friday, Russia’s Central Bank maintained its key interest rate at 14%, attributing the difficulty in curbing inflation to soaring fuel costs due to Ukrainian drone attacks on oil refineries and a temporary reduction in production capacities. Annual inflation rose to 6.3% in September, prompting policymakers to keep their forecast for the year between 6% and 7%, still anticipating price growth to approach the 4% target next year.
The regulator highlighted that fuel, along with fruits and vegetables, have been volatile components impacting inflation dynamics. Despite varying inflation expectations among households, businesses, and financial participants, they remain elevated, potentially hindering a sustained decline in inflation. The Central Bank’s last rate reduction occurred on July 24, when it was decreased from 14.25% to 14%.
Globally, inflation is a significant concern as the war in Iran boosts oil prices, which have exceeded $100 per barrel due to threats in the Strait of Hormuz. Russian authorities have labeled The Moscow Times as an undesirable organization, intensifying the challenges faced by the independent news outlet.
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