Russia's economy overheating causes rate increase - Central Bank

Russia's Central Bank still assesses the state of the Russian economy as being substantially overheated, Central Bank Governor Elvira Nabiullina said.

"Russia's GDP growth rate remained high in the first and second quarters, while inflation accelerated, which means that the economy remains in a state of significant overheating," Nabiullina said.

According to her, for the first time in 10 years, the country experienced cyclical overheating of the economy, "when a long period of high interest rates is needed to cool demand".

At the same time, in the first half of this year, the degree of overheating of the Russian economy "was the highest in the last 16 years," Nabiullina added.

On July 26, the Central Bank of Russia hiked the key rate to 18% per annum from 16%.