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Russia raises rates for first time since 2014, extends FX buying pause

September 14, 2018 By Andrey Ostroukh MOSCOW (Reuters) – The Russian central bank raised rates for the first time since late 2014 on Friday and promised not to buy foreign currency on the market until the end of this year end as it acknowledged risks of the weaker rouble and U.S. sanctions. The central bank raised its key interest rate to 7.50 percent from 7.25 percent, bringing it back to its level in March and indicating a rate cut is unlikely on a one-year horizon. Governor Elvira Nabiullina said the decision to raise rates was designed to limit risks of higher inflation, driven by the rouble volatility and the planned increase in vale-added tax from the next year. “Today’s decision is the response to the increased inflationary risks,” Nabiullina said. Further rate hikes could not be ruled out but the latest rate move is not necessarily the beginning of a monetary tightening cycle, Nabiullina explained. To curtail exchange rate volatility and its influence on inflation over the next few quarters, the central bank also decided to extend the pause in purchases of foreign currency for the finance ministry’s reserves by the end of this year from the earlier deadline that…

Source: One America News | Russia raises rates for first time since 2014, extends FX buying pause

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