The Central Bank of russia has increased its interest rate by 1 per cent to a new base rate of 16 per cent. This is the fifth increase since the current cycle of rises began in July 2023, when the base rate was set at 6.5 per cent, the UK Defense Intelligence reports.
The rise has been lower than previous ones. Russian inflation continued to accelerate towards the end of 2023, rising to 7.5 per cent year-on-year in November, up from 6.7 per cent in October. Overall, inflation for 2023 is estimated to be 7.4 per cent by russia’s statistics service, nearly double the Central Bank’s target.
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Russia’s continued invasion of Ukraine is highly likely to negatively impact the outlook for the russian economy. Imports have risen faster than exports, likely contributing to the rouble depreciating since the start of the war – highly likely a driver of inflation. As russia ramps up its defense spending at the cost of other areas, the risk of the russian economy overheating remains likely.
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