Central Bank sharply raised its key interest rate
UFA, 16 December 2014. /Bashinform News Agency, Elvira Latypova/.
The Bank of Russia raised its key interest rate from 10.5 to 17 percent per annum. The decision was taken on Tuesday night. The regulator explained it as a "necessity to limit devaluation and inflation risks significantly increased in recent days".
This is the sixth increase in the key rate since the beginning of 2014 and the sharpest since the late 1990s.
The last time the key rate was raised on December 11: the Central Bank raised it by 1 percentage point to 10.5 percent per annum in the midst of a sharp rise in exchange rate.
Since early August, the foreign currency in the Russian market rose in price by 65-80 percent.
The key interest rate is an instrument of monetary policy of the Bank of Russia. The Central Bank provides loans to commercial banks at the key rate for repo transactions. It directly affects the bank loans interest rates.