Bad News for Russians: Interest Rates Soar to an Enormous 16%

Written by Henrik Rothen

Dec.15 - 2023 1:01 PM CET

Interest Rates Soar to an Enormous 16%.

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If you're residing in Russia and looking to borrow money as an individual or a business, you'll need a really good reason to do so. The Russian Central Bank has announced that the interest rate will rise to a whole 16%.

According to Fontanka, the regulator announced the decision to raise the key interest rate from 15% to 16% today December 15th.

In a statement explaining its decision, the regulator pointed out that the current inflationary pressure remains high.

Inflation for the year 2023 is expected to be near the upper limit of the Central Bank's forecast range of 7–7.5%, but the GDP will turn out higher than expected, exceeding 3%.

"This means that the deviation of the Russian economy upwards from the trajectory of balanced growth in the second half of 2023 was more significant than the Bank of Russia assessed in October," the release on the Central Bank's website stated.

It is also noted that the overall pace of lending growth remains high, despite signs of slowing in some segments against the backdrop of tighter monetary policy. Inflation expectations among citizens and businesses have risen.

Since the Central Bank plans to stabilize inflation near 4% in 2024, it has decided to raise the key rate once again. Future decisions will be made "taking into account the actual and expected dynamics of inflation relative to the target, the development of the economy on the forecast horizon," as well as based on the assessment of risks from internal and external conditions.

For comparison, the interest rate in The U.S is set between 5.25-5.50 percent.

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