Surviving The 'attack' Of Economic Sanctions, Russia's Central Bank Raises Interest Rates By Up To Two Times

Illustrations (pixabay)

MOSCOW - The Central Bank of Russia, on Monday, February 28, officially doubled its benchmark interest rate while introducing several capital control policies, as a counter-strategy to various economic sanctions aimed at the country.

The Governor of the Central Bank of Russia, Elvira Nabiullina, also said that his party was currently stopping selling foreign currency activities in order to maintain the position of the ruble exchange rate which was under severe pressure.

"The central bank today raised its main interest rate to 20 percent due to new sanctions that trigger a significant deviation from the ruble exchange rate, and limit the central bank's options for using gold and its foreign exchange reserves," Nabiullina said at a press conference, as reported by Reuters. , Monday 28 February.

As is known, the United States (US) and a number of other major countries are bombarding Russia with a series of economic sanctions, following the country's invasion of its neighboring country, Ukraine. Sanctions are given in the hope of isolating the Russian economy, so that it can initiate peace efforts or a ceasefire.

With this strong external pressure, the Central Bank of Russia hopes that the move to increase interest rates can protect the domestic economy from the threat of inflation. "We have to raise tariffs (to) compensate residents for the increased risk of inflation," Nabiullina said.

Prior to this new policy, the ruble was known to have been under pressure to record lows with a weakening of nearly 30 percent. However, after the increase in interest rates to 20 percent, the position of the ruble was able to rebound to the green zone. The increase in interest rates to 20 percent itself is a record high level in this century, with the previous position still at the level of 9.5 percent.