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Solid evidence!
Interest rate hike
200 basis points
The Central Bank of Russia is really making a big move, directly announcing an increase in the benchmark interest rate by 200 basis points, shooting up to 21%, which is the highest since February 2003.
Previously, analysts in a Reuters survey only expected an increase of 100 basis points, but this time the central bank's actions exceeded everyone's expectations.
So why did the Central Bank of Russia do this? It's all because of inflation. In September, the inflation rate surged to 9.8%, significantly higher than August's 7.5%. Moreover, public expectations for inflation have reached the highest point since the beginning of the year. The central bank sees that the inflation risk is clearly biased towards rising in the medium term, so how can they not raise interest rates?
This time, the central bank maintained its hawkish stance and hinted that there might be further interest rate hikes at the next meeting.
High inflation expectations, economic growth deviating from the normal track, and deteriorating foreign trade conditions are all major issues currently facing the country.
Since early August, the Russian ruble has depreciated significantly against the dollar, with the official exchange rate falling by over 12%. Analysts say this is also an important factor driving inflation. The Central Bank of Russia's interest rate hike this time demonstrates its determination to combat inflation, although this may put some pressure on economic growth, but it's an unavoidable situation.
