Bloomberg economists allowed the Central Bank’s key rate to rise to 25% annually

Since November 21, when the US Treasury imposed sanctions against Gazprombank, the state corporation Dom.RF, BKS Bank and other credit institutions, the Russian currency has weakened by more than 9% against the dollar and 6% against the yuan, writes the newspaper agency. According to his words, since the beginning of 2024 the ruble has lost more than 21% against the American currency.

The fall of the ruble will most likely increase inflation, which the Central Bank is trying to contain by raising the interest rate to a record level, Bloomberg noted. “The Bank of Russia faces a dilemma: whether to raise interest rates further, even if this increases the risk of recession, or simply accept higher inflationary pressures,” BE Russia economist Alex Isakov told the agency. . According to him, the first option is more likely.

In the last meeting, on October 25, the Central Bank raised the key rate by 200 bp, to 21% annually, which was a record since February 2022, when the regulator raised the rate to 20% annually. At the same time, the Central Bank allowed another rate increase at the next meeting, which will take place on December 20.

On November 27, the dollar exchange rate on the Forex currency market exceeded 114 rubles, getting very close to 115 rubles. On November 28, the American currency showed a decline: at the time of this publication (22:15 Moscow time) it was trading at 108 rubles, 5.1489 rubles cheaper than the previous close.

The ruble began to strengthen after the Central Bank decided not to purchase foreign currency on the domestic market until the end of 2024 to reduce volatility. The decision to resume the purchase “will be taken taking into account the current situation in the financial markets,” the regulator said.