Russian Central Bank Governor Elvira Nabiullina announced yesterday that the Central Bank had raised its key rate by 1 percentage point to 8.5%, and telegraphed that there would likely be further such increases. “At the next meetings we admit further key rate’s increase,” she said.
Nabiullina’s explanation for the rise were the standard “inflation targeting” monetarist arguments. Russia’s inflation for 2023 is expected to be in the 5-6.5% range, which is above the 4% target. “Pro-inflationary risks” have increased, she argued, because “the increase in domestic demand surpasses the capacity to expand production, including due to the limited availability of labor resources. This reinforces persistent inflationary pressure in the economy.”
