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Russia’s Central Bank on Friday raised its key interest rate from 16% to 18%, a widely anticipated move as the country struggles to fight inflation amid surging defense spending for the war in Ukraine and widespread labor shortages across the economy.
“Inflation has accelerated and is developing significantly above the Bank of Russia’s April forecast,” the regulator said in a press release. “Growth in domestic demand is still outstripping the capabilities to expand the supply of goods and services.”
For that reason, the bank explained, “monetary policy needs to be tightened further” so that the government can reach its inflation target of 4%. Annual inflation has sped up in recent months, with consumer prices increasing 8.6% year-on-year in June
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