Russia carried out a bumper interest rate hike yesterday in a desperate bid to prop up its crumbling currency.
Following criticism from the Kremlin over her handling of the economy, central bank governor Elvira Nabiullina called an emergency meeting with officials that ended with a rate rise from 8.5 per cent to 12 per cent.
The rouble – which plunged to its lowest level against the dollar for a year and a half on Monday, triggering a rebuke from president Vladimir Putin’s economic adviser – bounced higher after the move.
Inflation fight: Russia’s central bank governor Elvira Nabiullina (pictured) called an emergency meeting that ended with a rate rise from 8.5% to 12%.
But it later gave up its gains as fears for the Russian economy – battered by sanctions after the invasion of Ukraine – continued to take their toll.
The Kremlin this week squarely laid the blame for the currency’s weakness at the central bank’s door, sparking speculation Nabiullina could be made a scapegoat.
The central bank raised rates in Russia to 20 per cent after the invasion of Ukraine to support the rouble.
Rates were cut to 7.5 per cent as the currency recovered on the back of rising oil prices.
But with the rouble on the slide, rates were hiked back to 8.5 per cent last month. It was not due to change interest rates again until next month – before the Kremlin’s intervention.
Stuart Cole, chief macro economist at Equiti Capital, said the slide in the rouble underlined ‘the costs of the invasion of Ukraine’.
