Russia raises interest rate to 7.5% amid inflation

By Ovunc Kutlu

ANKARA (AA) - Russia’s central bank increased its key interest rate by 75 basis points to 7.5% on Friday amid rising inflation.

The Bank of Russia said in a statement that inflation is developing substantially above its forecast, and it is expected to be within the range of 7.4-7.9% at the end of this year.

"The contribution of persistent factors to inflation remains considerable on the back of faster growth in demand relative to output expansion capacity," it said. "In this environment, given that inflation expectations are up again, the balance of risks for inflation is markedly tilted to the upside."

The bank said its monetary policy aims to limit this risk and inflation returning to 4%.

Inflation is expected to decline to 4.0-4.5% range in 2022, and remain close to 4% after that, it said.

This marked the sixth rate hike by the bank this year, while it last increased rates by 25 basis points in September.