Moscow took sharp action on Friday to curb inflation, fearing the effects of ever higher spending on the war in Ukraine and of a weakening Russian ruble.
Russia’s central bank took the unexpected step of raising its benchmark interest rate by a full percentage point, to 8.5 percent from 7.5 percent.
It was the first large hike in more than a year, and the bank warned that further increases were likely.
“It is a surprise and on its face reflects more concern at the central bank about inflation and how the economy is doing that we had appreciated,” said Robert Kahn, the head of the Geoeconomics Team at the Eurasia Group, a New York-based risk analysis firm.
“It suggests that the war is proving increasingly disruptive to economic activity and pushing up inflationary pressures.”
Persons:
Moscow, ”, Robert Kahn
Organizations:
Eurasia Group
Locations:
Ukraine, Russia’s, New York