Russia’s central bank raised its key interest rate to a record 21% in a bid to combat inflation fueled by military spending.
“Growth in domestic demand continues to significantly outpace the ability to increase the supply of goods and services,” the central bank said in a statement, adding that inflation was “significantly higher than the central bank’s July forecast, and inflation expectations are still rising.”
The bank dismissed the possibility of a further rate hike in December.
Russia’s economy continues to grow, fueled by continued oil export revenues and government spending on goods, including the military. One result is inflation, which the central bank has tried to combat by raising interest rates, which increase the cost of borrowing and spending on goods, theoretically easing pressure on prices.
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