The Bank of Russia follows suit. Another blow to Putin’s compatriots’ wallets

Presidential elections in Russia are scheduled for mid-March 2024. The confirmed candidate – in the literal sense of the word – is, of course, Vladimir Putin. However, this does not change the fact that he has to talk about uncomfortable topics during the election campaign. This is undoubtedly the growing inflation in the Russian Federation.

But let’s return to what the Kremlin claims. Putin admitted on Thursday (December 13) that the level of inflation at the end of the year will reach about 8%. He also confirmed that the central bank is dealing with the situation. On Friday, those words were confirmed.

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The Bank of Russia on Friday raised its key interest rate from 15%. Up to 16 percent, according to Bloomberg This is the highest level since April 2022, almost since the start of the invasion of Ukraine.

The fifth consecutive increase will lead, among other things, to: an increase in loan installments for Russians. The series was launched in August this year at an extraordinary meeting. Then the key rate rose from 8.5%. Up to 12 percent More importantly, the Bank of Russia announced that it will also tighten its belt next year, although this does not necessarily mean further increases.

– Until we see a sustainable trend of slowing price growth and lowering inflation expectations, The base rate will remain high as long as necessary – said Elvira Nabiullina, Head of the Central Bank of the Russian Federation.

What, according to the Bank of Russia, is the reason for high inflation? Nabiullina noted, among other things: the weak ruble exchange rate, unsatisfactory demand, linked to sanctions and the lack of Western brands on the market.