Russian cbank raises rate to 9.5% from 8% on sanctions, ruble fall

MOSCOW, Oct 31 (PRIME) -- The Russian central bank has raised its key rate to 9.5% as the ruble weakened hit by falling oil prices, while Western sanctions were boosted speeding up the consumer price inflation index (CPI) growth, the authority said in a statement published on its Website on Friday.

“CPI will remain higher than 8% by the end of the year,” the authority said.

The contribution of the ruble’s weakening and foreign trade restrictions, which were imposed in August, to inflation increase amounted to about 2.5 percentage points. The contribution of sanctions stands at 1.2 percent points while the ruble’s accounts for 1.3 percent points, the central bank said.

The GDP grew 0.2% in July–September, it said. The regulator believes that economic growth will be close to zero in October–November and in January–March on the back of both external and domestic factors, including falling oil prices, reducing trade volumes with Russia’s main partners and such structural problems as shrinking consumption and direct investment coupled with the aging population.

The CPI is likely to remain at the current level until April 2015 due to import restrictions imposed by Russia in response to the E.U. and U.S. sanctions and the ruble’s fall in August–October, the central bank said.

The CPI decrease will be slower than expected mainly due to inflationary expectations, it said.

The central bank plans to take measures aimed at slowing down the CPI to a target of 4% in the middle term, it said. If external conditions improve, the CPI and inflationary expectations tend to decrease, the authority will be ready to start monetary policy easing.

The next regulator’s board of directors meeting on the key rate level is planned for December 11, the central bank said.

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