Russia’s central bank will consider raising its benchmark interest rate by between 25 and 100 basis points from the current 5.5% at its next rate-setting meeting on July 23 to rein in inflation, Governor Elvira Nabiullina said on Monday.
After slashing the rate to a record low of 4.25% last year during the COVID-19 pandemic, the central bank has now raised it three times in 2021 to stem inflation, which shot above target in November and has shown no sign of slowing.
Speaking on Bloomberg TV, Nabiullina said monetary policy was the main tool to curb inflation, which exceeded 6% on an annual basis in June, its highest since late 2016, far above the bank’s 4% target.
When it raised the key rate by 50 basis points on June 11, the central bank said more hikes would be needed to combat inflation.
Higher rates help tame inflation by making lending more expensive and bank deposits more attractive. But tight monetary policy also restricts economic growth.
