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Sat, 01 Nov, 2014 12:00:48 AM FTimes- Xinhua Report, Nov. 01
The Russian Central Bank lifted on Friday its key interest rate by 1.5 percentage points to 9.5 percent, citing worsening economic situation.
The bank's decision was made against the backdrop of dropping oil price, depreciation of the national currency ruble and customer prices growth caused by the government's ban on food import, according to a statement published on its website.
The inflation rate would remain over 8 percent until the end of first quarter of 2015 with its pace in September-October exceeding forecasts, the statement said.
The bank said it could ease the monetary policy only if the external conditions improve -- in particular, western sanctions to be lifted -- and inflation expectations subside.
By the end of October, growth of customer prices in Russia amounted to 8.4 percent, with food prices growing by 11.4 percent in September.
The bank admitted that its inflation-targeting measures did not fully compensate inflation upward pressure.
It also said the economy growth in the third quarter amounted to 0.2 percent, citing low labor productivity, shrinking workforce and international situation uncertainty as the main factors behind the stagnation.
These factors, in turn, cause cooling of customers demand and decrease of investment into Russia's economy, it said, adding the near-flat economy growth would persist till the end of the first quarter of 2015.
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