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Ruble crisis points to larger-than-expected rate hikes

The continued slide in the ruble over the past few weeks has raised the prospect that Russia is in the grip of a self-fulfilling currency crisis in which the mere anticipation of currency weakness spurs further capital outflows and pushes the ruble even lower. The central bank needs to regain the initiative. A first step would be to raise interest rates by more than the market expects at this week’s Board meeting.


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