Russia Raises Key Interest Rate to 21 Percent

In an unprecedented move, Russia's Central Bank has raised its key interest rate by 200 basis points to 21%, the highest level since February 2003, in response to soaring inflation currently at 9.8%. The decision reflects the pressures of increased military spending and the ongoing impacts of Western sanctions, which have destabilized the economy. Analysts had anticipated a smaller increase, but the Central Bank's aggressive approach aims to combat pro-inflationary factors and stabilize the economy. The ruble's depreciation and rising inflation expectations further complicate the economic landscape. The bank has signaled the possibility of additional rate hikes in the future if inflationary risks persist. This move is part of a broader strategy to address the balance of risks in the economy, which remains skewed towards inflationary outcomes.