(Bloomberg) -- Russia’s central bank increased borrowing costs for the second time this year ahead of a spike in inflation next quarter from a tax hike and possible U.S. sanctions.
- The key interest rate rises to 7.75 percent, according to the statement.
- The decision was forecast by 16 of 42 economists surveyed by Bloomberg, with the rest predicting a hold.
- Regular foreign-currency purchases that were suspended to protect the ruble earlier this year, will resume from Jan. 15, the regulator said.
- Governor Elvira Nabiullina will hold a news conference at 3 p.m. in Moscow.
Key Insights
- A value-added tax increase next month is expected to accelerate inflation, and Russia may face more U.S. sanctions in early 2019. Although the ruble has strengthened this month, it’s still heading for a more-than 13 percent plunge for the year.
- The central bank surprised the market with its first hike in four years in September to stem a slide in the ruble fueled by concern over sanctions. Since then U.S. discussions over the measures have been pushed back.
- Nabiullina said last month that it will be possible to resume FX purchases from Jan. 15 “if the current situation on financial markets continues.”
Get More
- Annual inflation accelerated for a fifth month to 3.8 percent in November, edging close to the central bank’s target of 4 percent, and may reach 5.2 percent by the end of March, according to a Bloomberg survey.
- Russia’s economic growth is decelerating as consumption will be curtailed next year by the tax hike and inflation.
--With assistance from Zoya Shilova.
To contact the reporter on this story: Anna Andrianova in Moscow at aandrianova@bloomberg.net
To contact the editors responsible for this story: Gregory L. White at gwhite64@bloomberg.net, Natasha Doff
©2018 Bloomberg L.P.
Advertisement