Russia Set to Raise Main Rate as Ruble Rout Risks Stability - Bloomberg

Russia Set to Raise Main Rate as Ruble Rout Risks Stability - Bloomberg:



"Russia’s central bank will probably raise borrowing costs to avert threats to financial stability as oil prices near the lowest in more than five years and sanctions over Ukraine risk the collapse of the ruble.



The Bank of Russia will increase its key rate to 10 percent from 9.5 percent, according to the median estimate of 28 economists surveyed by Bloomberg. Ten forecast no change. Fifty of 77 traders polled by brokerage Tradition project a rate increase of between 100 and 400 basis points. The regulator will announce the decision at about 1:30 p.m. tomorrow in Moscow, followed by a news conference.


The ruble’s 40 percent slide this year has left policy makers with dwindling options after they shifted to a free-floating exchange rate ahead of schedule last month and spent almost $80 billion on defending the currency. The central bank, led by Governor Elvira Nabiullina, has raised rates by 400 basis points since President Vladimir Putin’s incursion into Crimea in March, which led the U.S. and the European Union to impose sanctions. Oil has tumbled into a bear market."



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