MOSCOW (Reuters) – Russia’s central bank will consider raising its key interest rate by up to 100 basis points at its December rate-setting meeting, Governor Elvira Nabiullina said on Tuesday before President Vladimir Putin called for pre-emptive measures.
The country’s key rate has increased six times this year from a record low of 4.25%, looking to control inflation that has accelerated to a five-year high above 8% and dented living standards.
“It is a serious problem, really sensitive for citizens, especially for families with low incomes,” President Putin told an investment forum in Moscow on Tuesday.
“It is important not only to overcome the consequences of inflation but to act proactively, removing factors that push prices growth.”
Moscow has been trying to contain high food inflation with taxes on grain exports as well as higher interest rates. However, inflation stood at 8.05% on Nov. 22, compared with the central bank’s 4% target and a year-end forecast of 7.4-7.9%.
Central bank chief Nabiullina said the key interest rate could be raised from 7.5% by up to 100 points at its Dec. 17 board meeting.
“But it needs to be said that the inflation forecast now is close to the upper boundary of our forecast. We will take this into account,” Nabiullina told reporters.
The central bank, which is independent from the Kremlin and government, has said it planned to keep its key rate above 6% until at least mid-2023 to bring down inflation.
Nabiullina said that holding rates unchanged at the December meeting is the least likely scenario. Earlier on Tuesday, she said it was premature to speak of lowering the 4% inflation target in the future.
(Reporting by Andrey Ostroukh; Additional reporting by Darya Korsunskaya, Vladimir Soldatkin, Alexander Marrow, Polina Devitt and Katya Golubkova; Editing by Ed Osmond and David Goodman)