{"id":2001169,"date":"2023-08-15T11:54:02","date_gmt":"2023-08-15T15:54:02","guid":{"rendered":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/russian-central-bank-jacks-up-rates-to-12-to-support-battered-rouble\/"},"modified":"2023-08-15T11:56:52","modified_gmt":"2023-08-15T15:56:52","slug":"russian-central-bank-jacks-up-rates-to-12-to-support-battered-rouble","status":"publish","type":"post","link":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/russian-central-bank-jacks-up-rates-to-12-to-support-battered-rouble\/","title":{"rendered":"Russian central bank raises rates to 12% to aid struggling rouble."},"content":{"rendered":"<aside class=\"mashsb-container mashsb-main mashsb-stretched\"><div class=\"mashsb-box\"><div class=\"mashsb-count mash-medium\" style=\"&quot;\"><div class=\"counts mashsbcount\">22<\/div><span class=\"mashsb-sharetext\">SHARES<\/span><\/div><div class=\"mashsb-buttons\"><a class=\"mashicon-facebook mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/www.facebook.com\/sharer.php?u=https%3A%2F%2Fwww.conservativenewsdaily.net%2Fbreaking-news%2Frussian-central-bank-jacks-up-rates-to-12-to-support-battered-rouble%2F\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Facebook<\/span><\/a><a class=\"mashicon-twitter mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/twitter.com\/intent\/tweet?text=&amp;url=https:\/\/www.conservativenewsdaily.net\/breaking-news\/?p=2001169&amp;via=ConservNewsDly\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Twitter<\/span><\/a><a class=\"mashicon-subscribe mash-medium mash-nomargin mashsb-noshadow\" href=\"#\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Subscribe<\/span><\/a><div class=\"onoffswitch2 mash-medium mashsb-noshadow\" style=\"display:none\"><\/div><\/div>\n            <\/div>\n                <div style=\"clear:both\"><\/div><\/aside>\n            <!-- Share buttons by mashshare.net - Version: 4.0.47--><div class=\"entry-content\">\n<p><strong>MOSCOW \u200d(Reuters) &#8211;<\/strong> \u200bRussia\u2019s central bank took decisive action on \u200cTuesday, raising \u200dits key interest rate by 350 basis points to 12% in an emergency move. This bold\u200c step was \u2062taken in an effort to halt the recent slide of the rouble,\u200d following a public call from the Kremlin for tighter monetary policy.<\/p>\n<p>The \u2063extraordinary rate\u2063 meeting \u200bcame after the rouble plummeted past the 100 threshold against the dollar on Monday. The impact of Western sanctions on Russia\u2019s balance of trade,\u200c coupled with\u2063 soaring military spending, has put \u200cimmense\u200c pressure on the currency.<\/p>\n<div id=\"div-gpt-ad-1663871513696-art-1\" style=\"min-width: 320px; min-height: 50px;  text-align: center;\">  \t<script>  \t\tgoogletag.cmd.push(function() { googletag.display('div-gpt-ad-1663871513696-art-1'); });  \t<\/script>  <\/div>\n<div class=\"ad-slot__ad-label\">Advertisement<\/div>\n<\/p>\n<p>The rouble pared gains after the\u2062 decision, remaining 0.5% weaker at 98.16 by 1056 GMT. However, this was still significantly \u200dabove the lows near 102 \u200con Monday, which had not been seen since the early weeks after Russia invaded Ukraine. \u200d  <\/p>\n<p>President Vladimir \u2064Putin\u2019s \u200beconomic \u2063adviser, Maxim Oreshkin, publicly criticized \u200bthe central bank, blaming its soft monetary policy for weakening the rouble. \u200bIn\u2062 response to Oreshkin\u2019s words, the bank announced the emergency meeting, throwing the currency a \u200dlifeline. <\/p>\n<p>\u201cInflationary pressure is \u200dbuilding up,\u201d the \u2064bank stated on Tuesday.<\/p>\n<p>\u201cThe pass-through of the rouble\u2019s depreciation to \u200dprices is \u200cgaining\u2062 momentum and \u200dinflation expectations are on the rise.\u201d  <\/p>\n<p>While \u200dthis move \u200dmay temporarily slow\u200d the pace \u2062of\u200d depreciation, analysts\u2064 largely agree that it will not have a long-lasting\u200d impact. Timothy Ash, \u200dsenior EM sovereign strategist at Bluebay Asset\u200b Management, \u2062stated, \u201cAs long as the war continues, it just gets worse for Russia, the Russian \u2063economy, and the rouble. Hiking policy rates won\u2019t solve\u2064 anything\u200b \u2013 they might temporarily slow the pace of depreciation of the \u200brouble at the price \u200dof\u200b slower real\u200c GDP\u200d growth \u2013 unless the core problem, the war and sanctions, are resolved.\u201d<\/p>\n<p><strong>ECONOMICS OR POLITICS?<\/strong><\/p>\n<p>In its original statement, the bank removed its usual hawkish guidance that it would \u2064consider future rate hikes, leading some analysts to \u2063speculate that interest rates had peaked. However, shortly after the decision, the bank \u2063issued an additional statement: \u201cIn \u200dthe case of strengthening pro-inflationary \u200drisks, \u2064an additional increase in the key rate is possible.\u201d<\/p>\n<p>Central Bank Governor Elvira Nabiullina \u2063has received praise for her\u200c handling\u200c of the economy since Russia&#8217;s military operation in \u2063Ukraine\u2062 began. However, the\u200c plunging rouble \u2063and high inflation have put her on the back foot, especially among pro-war nationalists. The Kremlin\u2019s public criticism of her monetary policy adds further pressure as Russia heads towards a presidential election in March 2024, with consumers battling rising prices for basic goods. <\/p>\n<p>\u201cWhile such a depreciation risks boosting inflation, it is \u2064also the signal it sends out to the Russian \u200dpublic about the costs of the invasion of Ukraine,\u201d said Stuart Cole, \u200bchief macro economist at Equiti Capital in London. <\/p>\n<p>\u201cAs such, today\u2019s decision will likely have had an element of politics behind it as \u2063well as economics.\u201d <\/p>\n<p>Andrei Melaschenko, economist at Renaissance Capital in Moscow, said the bank was \u200cright to react to inflation risks, but\u2064 the timing of the meeting, being\u200c announced so soon after \u2064Kremlin criticism, raised questions about the bank\u2019s independence. <\/p>\n<p>\u201c(Nabiullina) has built quite a strong\u2063 team around her \u200band the central bank has been a strong regulator and I think and the market, \u2064both the\u2064 domestic and \u200binternational \u200dmarket, sees it that way.\u201d\u2062 <\/p>\n<p><strong>INFLATION PRESSURE<\/strong><\/p>\n<p>The bank \u200clast made \u200can emergency \u200crate hike in late February 2022, \u2064raising the rate to \u206320% in \u200dthe immediate \u2064fallout \u200dof \u200cRussia\u2019s dispatching \u200ctroops to Ukraine. Since then, the bank \u2064steadily lowered the cost of borrowing to 7.5% as inflation pressure eased in the second half of 2022. \u2064 <\/p>\n<p>However, \u2063since its \u200dlast cut in\u200c September 2022, the \u2063bank has held rates but increased its hawkish rhetoric. It eventually hiked rates by 100 basis points\u200c to 8.5% \u200cat its last scheduled meeting in July.\u2064 The next rate decision is\u2062 due on \u2062Sept. 15.<\/p>\n<p>Russia experienced double-digit inflation in 2022, and after\u200c a deceleration in\u200b the spring of 2023 due to the high base effect, annual inflation is now above the central bank\u2019s 4% target and quickening. \u2062 <\/p>\n<p>On a seasonally adjusted\u200d basis, current price growth over the last three months\u200b averaged 7.6%, according to the bank. <\/p>\n<p>Promsvyazbank \u2064analysts\u2063 believe that an \u200cadditional rate hike may be \u2062necessary if the rouble does\u2064 not \u200cstabilize. They \u2064also suggest that\u200b measures to reduce the rouble liquidity surplus \u200care needed.  \u2063    <\/p>\n<p><strong>&#8216;SLOW THE BLEEDING&#8217;<\/strong><\/p>\n<p>Russia\u2019s widening budget deficit\u2063 and stark labor shortage have contributed to rising inflationary pressure this year. However, it was the rapid slide\u2063 of\u200b the\u2064 rouble, from around 70 \u200dagainst the dollar at the start of\u2064 the year to over \u200b100 on Monday, that \u200bpushed the central bank to take action.      <\/p>\n<p>The bank, which attributes\u200d the rouble&#8217;s\u200d slide to Russia\u2019s <a href=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/tumbling-rouble-claws-back-ground-as-central-bank-to-meet\/\" title=\"Ruble rebounds as central bank prepares for meeting.\">shrinking current account surplus<\/a>\u200b (down 85% year-on-year\u200d in January-July), has already attempted \u2064to \u200dlimit the currency&#8217;s decline. Last\u2063 week, it\u2063 halted\u200d the finance ministry\u2019s FX\u2063 purchases in an effort to\u200b reduce volatility. This\u2063 step effectively saw Russia abandon its \u2062budget rule. However, analysts\u2064 widely agree that \u200bthese measures \u2062alone \u2063were too minimal \u2064to significantly support\u200b the\u2063 currency.<\/p>\n<p>\u201cToday\u2019s rate hike will only temporarily slow the bleeding,\u201d said Liam Peach, <a href=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/russian-central-bank-jacks-up-rates-to-12-to-support-battered-rouble\/\" title=\"Russian central bank raises rates to 12% to aid struggling rouble.\">senior emerging markets economist<\/a> at Capital \u2064Economics in London. \u2062 <\/p>\n<p>\u201cRussia will struggle to attract capital inflows because of sanctions,\u201d he added. \u201cAnd\u2063 there\u2019s little ammunition for \u2062FX intervention \u2013 the central bank\u2063 has \u2062some unfrozen renminbi assets and gold reserves, but the bar\u2062 for using these is likely to be high.\u201d<\/p>\n<p>  (Writing by Alexander Marrow; additional reporting by Marc Jones; editing by Guy Faulconbridge and Christina Fincher)<\/p>\n<p><a href=\"https:\/\/www.oann.com\/uncategorized\/russian-central-bank-jacks\/attachment\/file-photo-a-vendor-counts-russian-rouble-banknotes-at-a-market-in\/\"><\/a><\/p>\n<p><a href=\"https:\/\/www.oann.com\/uncategorized\/russian-central-bank-jacks\/attachment\/a-view-shows-russias-central-bank-headquarters-in-moscow\/\"><\/a><\/p>\n<p><a href=\"https:\/\/www.oann.com\/uncategorized\/russian-central-bank-jacks\/attachment\/a-view-shows-russias-central-bank-headquarters-in-moscow-2\/\"><\/a><\/p>\n<\/p><\/div>\n<div class=\"entry-content\">\n<p>A\u2062 grassroots fight\u200d over\u200d parental and transgender children\u2019s rights \u200cis brewing in New \u200bJersey. 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This decision was made following a request from the Kremlin for stricter monetary policy. The rate hike occurred as the rouble fell below the 100 threshold.<\/p>\n","protected":false},"author":66,"featured_media":2001171,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_mo_disable_npp":"","fifu_image_url":"https:\/\/cndimages.nyc3.digitaloceanspaces.com\/breaking-news\/wp-content\/uploads\/2021\/01\/IMG_2758-scaled-1.jpg","fifu_image_alt":"","footnotes":""},"categories":[542],"tags":[],"class_list":["post-2001169","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-oann"],"fifu_image_url":"https:\/\/cndimages.nyc3.digitaloceanspaces.com\/breaking-news\/wp-content\/uploads\/2021\/01\/IMG_2758-scaled-1.jpg","_links":{"self":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/2001169","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/users\/66"}],"replies":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/comments?post=2001169"}],"version-history":[{"count":0,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/2001169\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media\/2001171"}],"wp:attachment":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media?parent=2001169"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/categories?post=2001169"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/tags?post=2001169"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}