Russia Bracing for Massive Rate Hike as Inflation Soars

Russia’s central bank is expected to raise interest rates by 200 basis points in its meeting on December 20, amid soaring inflation and a weaker ruble. The move aims to tame the rapidly rising consumer price index, which reached 8.9% in November, up from 8.5% in October.

The surge in inflation has been driven by higher food prices and the impact of US sanctions, which have weakened the ruble. Russia’s economy, still reeling from its invasion of Ukraine in 2022, is struggling to keep pace with rising demand for basic goods.

Analysts warn that the central bank may need to hike rates further, potentially pushing inflation “far above” 9% year-on-year by 2025. The International Monetary Fund has also predicted a slowdown in Russia’s growth, citing reduced private consumption and investment amid slower wage growth.

The weaker ruble has exacerbated the problem, making imports more expensive for Russia. Despite efforts to mitigate the impact of sanctions through import substitution and energy exports, international penalties continue to hurt the country.

Source: https://www.cnbc.com/2024/12/16/russias-central-bank-is-losing-the-battle-against-inflation.html