Despite 15 Month Highs in Inflation, Russia Holds Key Interest Rates Unchanged

“Russia’s central bank refrained from easing borrowing costs after inflation surged to a 15-month high, warning of the threat of faster price growth and defying government calls for lower rates to support the slowing economy.

Bank Rossii held the refinancing rate at 8.25 percent for a fifth month at a meeting in Moscow today, it said in a statement on its website. The move was forecast by 21 of 22 economists in a Bloomberg survey. Price growth will probably remain above the upper limit of this year’s 5 percent to 6 percent target range until the second half, a prolonged run that risks heightening expectations of higher inflation, according to the statement.

Policy makers are resisting growing government pressure to ease monetary policy after economic growth last year slowed to 3.4 percent, the weakest since a 2009 slump. The central bank has a free hand to raise or lower borrowing costs and relies only on its own forecasts in steering policy, First Deputy Chairman Alexei Ulyukayev has said….”

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