An acceleration in inflation, in part due to the recent sharp drop in the ruble, caused Russia’s central bank to hike interest rates by 50bp today. Looking ahead, with inflation likely to remain high and the ruble vulnerable to a further escalation in tensions in Ukraine, monetary conditions are set to remain tight for the foreseeable future. A pick-up in capital flight on the back of the crisis in Ukraine could cause the Bank to hike rates even further.
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