Russia raises main interest rate

July 26, 2014 - 12:19:12 am

MOSCOW: Russia’s central bank moved yesterday to shield the country’s economy from tightening Western economic sanctions over Ukraine, raising its main interest rate in a surprise move.

The Bank of Russia explained its decision to raise its main rate by half point to 8 percent by saying that “inflation risks have increased due to a combination of factors, including, inter alia, the aggravation of geopolitical tension and its potential impact on the ruble exchange rate dynamics.” 

The increase was the third since March as the central bank began to tighten monetary policy when the Russian economy was buffeted by the uncertainty generated by the Ukraine crisis and Western sanctions. “If high inflation risks persist, the Bank of Russia will continue raising the key rate,” it added.