Russia's Central Bank Raises Interest Rates to 15% Amid Surging Inflation

Rate increased for fourth time this year amid weak rouble, Western sanctions due to Ukraine conflict, and rising military expenditures; Russia's currency loses about a quarter of its value against the US dollar.

Russia's Central Bank has raised its key interest rate by 200 basis points to 15% in an effort to curb stubbornly high inflation. The annual inflation rate is expected to range from 7 to 7.5% this year.
The rate hike, which outstripped expectations, represents the fourth increase in a row this year, leading to a total increase of 7.5 percentage points since July.
The increase in interest rates was driven by several factors including weak ruble, disruption in global food supplies due to Russia's invasion of Ukraine, increased government spending on military, and widening trade deficit due to Western sanctions.
The sanctions imposed over Russia's military operation in Ukraine have greatly affected the Russian economy and resulted in the ruble losing about a quarter of its value against the US dollar this year.
Analysts indicate that while increasing interest rates can help check inflation, its long-term efficacy may be limited due to economic challenges presented by Western sanctions and the limited appeal for foreign investment in Russia.