Bank of Russia Raises Rate from 19% to 21%, Highest Since 2003, Exceeding Forecasts Amid Surging Inflation

Oct 25, 2024, 10:52 AM

The Bank of Russia has raised its key interest rate from 19% to 21%, exceeding forecasts and marking the highest level since 2003. This third consecutive rate increase reflects policymakers' efforts to combat surging inflation fueled by increased government military spending amid the ongoing conflict in Ukraine. The move surpasses economists' expectations of a 20% rate, with 9 out of 13 economists predicting the lower figure. Labor shortages and additional fiscal spending are contributing to mounting inflationary risks. The central bank indicated the possibility of further rate increases in upcoming meetings and forecasts that annual inflation will decline to 4.5–5.0% in 2025.