By Paul Hannon
Russia's central bank raised its key interest rate for the fifth time in an effort to contain a surge in inflation as manpower and other resources are diverted to sustain the invasion of Ukraine.
The Bank of Russia lifted its key interest to 16% from 15%, in line with investor expectations. When the central bank started its current series of increases in July, the key rate stood at 7.5%. The series of rate rises, aided by the reintroduction of some capital controls, has helped steady the ruble, which had previously been tumbling.
However, the central bank said consumer prices continue to increase more rapidly than it had expected, while government spending will stay high for longer than previously indicated. The annual rate of inflation was 7.5% in November, almost double the central bank's target.
In a statement, the central bank said rates would have to remain high for some time.
"The return of inflation to target in 2024 and its further stabilisation close to 4% assume that tight monetary conditions will be maintained in the economy for a long period," it said.
Write to Paul Hannon at paul.hannon@wsj.com
(END) Dow Jones Newswires
12-15-23 0551ET
