Russian central bank hikes policy rate by 100 basis points

Bank increases key rate to 8.5% as part of efforts to curtail inflation

By Tuba Ongun

ANKARA (AA) - Russia’s central bank hiked its key interest rate by 100 basis points on Friday, above the market forecast.

After keeping the rate unchanged at 7.5% for the sixth consecutive meeting, the bank decided to increase the key rate to 8.5% per annum in its July meeting.

"The Bank of Russia holds open the prospect of further key rate increase at its next meetings to stabilise inflation close to 4% in 2024 and further on," the bank said in a statement.

The bank raised its inflation forecast for this year to 5%-6.5% and kept the 4% target for 2024.

According to the latest data, annual consumer inflation rose to 3.2% in June from 2.5% in May.

It forecast that the GDP growth rate will be 1.5-2.5% this year, 0.5-2.5% next year, 1.0-2.0% in 2025, and 1.5-2.5% in 2026.

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