MOSCOW: Russia’s central bank on Friday raised its interest rate by 100 basis points to 6.5 percent—its biggest increase since a 2014 currency crisis—as the country battles soaring food prices.
The Russian economy was hard-hit by the coronavirus pandemic and the 2020 oil price crisis, and authorities are under pressure following a leap in prices for staple goods such as sugar, sunflower oil and eggs, reports AFP.
According to the bank’s estimates, the Russian economy reached its pre-pandemic level in the second quarter of 2021.
However, the “steady growth in domestic demand exceeds production expansion capacity in a wide range of sectors,” the bank added.
As a result, “businesses find it easier to transfer higher costs to prices”.