Russian central bank hikes rates to fight inflation fuelled by military spending
Russia’s central bank has raised its key interest rate by a full percentage point to 19% to combat high inflation as government spending on the military strains the economy’s capacity to produce goods and services and drives up workers’ wages
MOSCOW (AP) — Russia's central bank hiked interest rates to their highest since the Kremlin sent troops into Ukraine more than 2 1/2 years ago, a step aimed at combatting the inflation fuelled by massive government outlays for the military — and by robust spending from Russian consumers in shops.
The bank raised its key rate to 19%, just below the level from late February 2022. Then the policy rate reached an unprecedented 20% in a desperate bid by the bank to shore up the ruble and ward off a financial collapse amid sanctions imposed by Western governments.
Today's situation is different: inflation is a sign of an economy overheating from government outlays and consumer demand that are outpacing the economy's capacity to produce goods and services.
Muscovites shopping Thursday on Bolshaya Dorogomilovskaya Street in western Moscow were well aware of the pace of price increases.
