Russia’s Central Bank decided to hold its key interest rate at 14% during its latest meeting on Friday, weighing inflation risks against the need to lower currently high borrowing costs for businesses and consumers as the Kremlin prioritizes spending on the war against Ukraine.
The Central Bank reported that annual inflation hit 6.8% earlier in the week. Policymakers slightly increased their full-year inflation forecast, now at 7.1% to 7.6%, though they still expect price growth to fall toward the 4% target next year.
Inflation expectations remain high, the Central Bank said Friday, though officials have argued that some of the more recent price increases are rooted in one-time factors, like Ukraine’s strikes on oil refineries raising the cost of gasoline and diesel.
“Underlying price growth has not yet decreased… primarily due to the impact of a temporary reduction in production capacities in certain sectors,” it said in a statement, while also alluding to inflation risks associated with the war in Iran and its impacts on global energy markets.
The rate hold, which analysts widely expected, comes as spending on the war in Ukraine continues to strain the Russian government’s finances, while Ukrainian drone and missile attacks on energy infrastructure and commercial warehouses in recent months have raised the cost of some goods and services.
This is a breaking news story. Please come back later for updates.
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