The Bank of Russia announced the hiking of its benchmark interest rate to 13% on Friday, the third time in a row it has raised rates since July.
Russia’s central bank raised its benchmark interest rate from 7.5% to 8.5% in July, before announcing a further rise to 12% in August.
The Bank of Russia attributed the move to the high “inflationary pressure” the Russian economy was currently experiencing. The bank also said that increased domestic demand that exceeded production expansion capacity and the weakening of the ruble over the summer” had added to the factors boosting inflation.
The Central Bank also raised its inflation forecast for the end of 2023 to 6-7% from the previous 5-6%. “Rising inflationary pressure is visible in an ever-growing range of goods and services,” the bank said, adding that high domestic demand had further weakened the ruble further due to increased demand for imported goods.
Following Russia’s invasion of Ukraine and the imposition of Western sanctions on 28 February 2022, the Bank of Russia more than doubled its interest rate from 9.5% to 20%.