The Russian central bank raised the key rate for the second time in a year

Current inflationary pressure remains high. Annual inflation at the end of 2024 is likely to exceed the July forecast range of 6,5-7,0%.

Due to significant inflationary pressure, the Bank of Russia raised the key rate from 18 to 19% per annum. This is the second increase in recent months, RFE/RL reports.

"The current inflationary pressure remains high. According to the results of 2024, annual inflation will likely exceed the July forecast range of 6,5-7,0%," the Board of Directors of the Central Bank said in a statement.

It is noted that "an additional tightening of monetary policy is needed to lower inflationary expectations."

The key (base) interest rate is the minimum interest rate at which the Bank of Russia issues loans to commercial banks. Accordingly, an increase in the key rate leads to an increase in the price of loans. High interest rates on loans slow down the growth of the economy and purchasing power, as a result, inflation should decrease.