Key Interest Rate Moves Up: Causes and Effects

Monitoring of Russia's Economic Outlook. IEP. Moscow. 2018. No. 16, pp. 5-7

3 Pages Posted: 25 Oct 2018 Last revised: 30 Oct 2018

See all articles by Alexandra Bozhechkova

Alexandra Bozhechkova

Gaidar Institute for Economic Policy; Russian Presidential Academy of National Economy and Public Administration (RANEPA) - Institute of Applied Economic Research

Pavel Trunin

Gaidar Institute for Economic Policy

Date Written: October 2, 2018

Abstract

In September the Russian central bank has raised its key interest rate, for the first time since 2014, by 0.25 p.p. to 7.5% p.a. in response to increasing risks of higher inflation, including the Russian ruble devaluation (induced by new sanctions against Russia and by capital outflows from emerging markets on the back of tightening US Fed’s monetary policy) as well as the expected VAT hike scheduled for 2019. Although the above risks have realized only in part, the central bank has had to raise its 2019 inflation forecast to 5.5% and to adopt a tighter monetary policy.

Keywords: Russian Economy, Central Bank, Interest Rate, Monetary Policy

JEL Classification: E31, E43, E44

Suggested Citation

Bozhechkova, Alexandra and Trunin, Pavel, Key Interest Rate Moves Up: Causes and Effects (October 2, 2018). Monitoring of Russia's Economic Outlook. IEP. Moscow. 2018. No. 16, pp. 5-7, Available at SSRN: https://ssrn.com/abstract=3259105 or http://dx.doi.org/10.2139/ssrn.3259105

Alexandra Bozhechkova

Gaidar Institute for Economic Policy ( email )

Gazetny pereylok 3-5
Moscow, 125993
Russia

Russian Presidential Academy of National Economy and Public Administration (RANEPA) - Institute of Applied Economic Research ( email )

Russia

Pavel Trunin (Contact Author)

Gaidar Institute for Economic Policy ( email )

Gazetny pereulok, 3-5
Moscow, 125993
Russia

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