Bank of Russia Hikes Key Rate to a 20-Year High
Aggressive Move Aims to Tame Soaring Inflation
Emergency Meeting Held as Ruble Tumbles
In a surprise move, the Bank of Russia has raised its key interest rate to 20%, its highest level since 2003, in a desperate attempt to curb soaring inflation and stabilize the plummeting ruble.
The emergency rate hike, announced after an unscheduled meeting of the bank's board of directors, is the second major increase this year. The central bank raised the rate from 9.5% to 14% just last month.
The ruble has lost nearly half of its value against the dollar since Russia invaded Ukraine, and inflation is now running at 13.5% per year, far above the central bank's target of 4%.
The central bank's aggressive action is a sign of growing concern about the impact of the war in Ukraine on the Russian economy. The increase is expected to make it more expensive for businesses to borrow money, which could slow economic growth.
However, the move is also likely to push up the cost of living for ordinary Russians, who are already struggling with rising prices.
The Bank of Russia's decision is the latest in a series of measures taken by the government to try to stabilize the economy. Other measures include imposing capital controls and raising taxes on exports.
It remains to be seen whether the rate hike will be enough to tame inflation and stabilize the ruble. The conflict in Ukraine is ongoing, and its impact on the Russian economy is likely to continue to be felt for some time to come.
In a statement, the central bank said it will continue to monitor the situation closely and will take further action as necessary.
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