Central Bank of Russia keeps interest rate unchanged at 20%

• The bank had earlier more than doubled the interest rate from 9.5% to 20%

• The CBR warned of considerable uncertainty in the country’s economy

The Central Bank of Russia announced on Friday to keep its key interest rate unchanged at 20% after the sanctions imposed on the country take a toll on its economy.

In late February, the bank had more than doubled the interest rate from 9.5% to 20% as the country’s currency plunged to lowest level amid the international sanctions.

The bank also warned of considerable uncertainty as the country’s economy undergoes a “large-scale structural transformation.”

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The sharp increase in its key rate had “helped sustain financial stability,” the central bank said in a statement on Friday.

“The Russian economy is entering the phase of a large-scale structural transformation, which will be accompanied by a temporary but inevitable period of increased inflation, mainly related to adjustments of relative prices across a wide range of goods and services,” it said.

“The Bank of Russia’s monetary policy is set to enable a gradual adaptation of the economy to new conditions and a return of annual inflation to 4% in 2024.”

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The country’s currency ruble had plunged to record low levels against dollar since its invasion of Ukraine.

Earlier this week, Russia was also on the brink of a historic debt default for the first time in decades, which it managed to avoid at the last minute.

Picture Credits: Reuters