Russian Central Bank raises interest rates by 10.5 points
The Russian central bank announced on Monday to raise its key rate very sharply, by 10.5 points, to 20%, to face the severe economic sanctions decreed by the West to punish Moscow for its invasion of Ukraine.
“The Board of Directors of the Bank of Russia has decided to raise the key rate to 20% per year,” said the monetary institution, quoted by Russian news agencies.
“The Bank of Russia will make new decisions on the key rate based on an assessment of the risks associated with external and internal conditions and the response of financial markets to these risks,” she added, while it tries to defend the ruble.
The United States, the European Union and other countries have announced that they will exclude certain Russian banks from the Swift international banking payment system and any transactions with Russia’s central bank.
The G7 countries – Canada, France, Germany, Italy, Japan, Britain and the United States – have warned that they will take “further measures” in addition to the sanctions already announced if Russia does not cease its operations military.
Several European subsidiaries of Sberbank Russia, majority-owned by the Russian government, are failing or likely to fail due to the reputational cost of the war in Ukraine, the European Central Bank, the lenders’ supervisor, said on Monday. The first casualty appeared to be Sberbank’s Austria-based subsidiary, after depositors fled.
The European Central Bank said early Monday that the bank had 13.6 billion euros in assets at the end of last year, but has experienced “significant deposit outflows” due to “geopolitical tensions.”
On the currency markets, the rouble plunged nearly 30 per cent to an all-time low versus the dollar on Monday.
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