Russia’s central bank left interest rates on hold at 20% on Friday after an emergency rate hike in late February to support financial stability, warning of higher inflation and an economic slowdown.
The central bank hit rates after raising interest rates from 9.5% to 20% on February 28 as the ruble plummeted to a record low after the West imposed sanctions on Russia after it sent tens of thousands of troops into Ukraine had sent.
On Friday, the central bank said inflation, its main area of responsibility, would return to its 4% target in 2024 but gave no inflation forecast for this year.
“Russia’s economy is entering a period of large-scale structural change accompanied by a temporary but inevitable period of elevated inflation,” the central bank said in a statement.
Russia’s economy will contract in the coming quarters, the bank said.
The rate decision was in line with a consensus forecast from analysts polled by Reuters. High inflation is affecting living standards and has been a major household concern for years. Higher interest rates help tame inflation by raising the cost of borrowing and making bank deposits more attractive.
The next rate setting meeting is scheduled for April 29th.