Russia: Central Bank discount rate hike to combat inflationary flare-up
Inflation is worrying Russia and the central bank is responding.
To respond to this inflationary blaze, the Central Bank had to move with traditional instruments. On 23 July, the Russian monetary institution raised its reference rate by 100 basis points to 6.50% per annum.
A CBR (Central Bank of Russia) statement said the decision was based on updated macroeconomic forecasts, which have been significantly revised.
“The growth of the Russian economy accelerated in the second quarter and inflationary pressure turned out to be higher and more persistent than expected. Some sectors are already showing signs of overheating, ”CBR Governor Elvira Nabiullina said following a meeting of the bank's board of directors.
According to Nabiullina, the rate hike is necessary to bring inflation back to target. Inflation reached 6.5% in annualized terms on 29 July, a level significantly above the target and close to the five-year highs. The biggest price increases in the second quarter of 2021 were for building materials, furniture and automobiles.
The causes of the inflationary increase in a country like Russia, a producer of raw materials, is mainly linked to the breakdown of international logistic chains, with what follows for industrial supplies. However, Ukraine also increased its discount rate from 7.5% to 8% for the same anti-inflationary reasons.
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The article Russia: increase in the Central Bank's discount rate to combat the inflationary flare comes from ScenariEconomici.it .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/russia-aumento-del-tasso-di-sconto-della-banca-centrale-per-combattere-la-fiammata-inflazionistica/ on Sun, 25 Jul 2021 08:00:22 +0000.