In a bid to tackle soaring inflation, Russia's central bank raised its key interest rate to an unprecedented 21% on Friday. This move comes as government expenditure, particularly on the military, strains the economy's production capabilities, igniting wage increases. The central bank highlighted that domestic demand is notably outpacing supply. Furthermore, inflation remains significantly above the bank's predictions, and expectations continue to rise. More rate hikes are anticipated in December.
Russia's economy, however, continues to expand, bolstered by oil export revenues and state spending, including on military procurement. The increased interest rate, a tool to discourage borrowing and spending, aims to alleviate inflationary pressures. This marks Russia's highest interest rate since the measure was established in 2013, surpassing the previous record set in 2022 during the ruble crisis triggered by sanctions related to the Ukraine conflict.
The nation's economic performance remains robust, with a 4.4% growth in the second quarter of 2024 and low unemployment at 2.4%. Factories operate at full capacity, largely due to military production demands and compensating for disrupted imports due to sanctions. Despite these challenges, government revenues are bolstered by sustained oil and gas exports, with Russia circumventing Western-imposed price caps through its own fleet of tankers. In July alone, oil revenues amounted to approximately $17 billion. (This story was generated by Newser's AI chatbot. Source: the AP)
,
uBlock 
,
and
Ghostery 
)
