By Paul Hannon
The Bank of Russia has lifted its key interest rate to 5.5% from 5% after starting to tighten policy in March--when its key rate stood at 4.25%--and said more rate rises are likely over the coming months.
"Increased inflationary pressure in the context of the completing economic recovery can lead to a more substantial and prolonged deviation of inflation upward from the target," it said. "This creates the necessity of further increases in the key rate at upcoming meetings."
Despite earlier rate rises, the annual rate of inflation has risen further above the central bank's 4% target, and was 6% in May.
The Bank of Russia said demand for goods and services is rebounding at a faster pace than the economy's ability to supply them, a problem reported by businesses around the world.
It added that a rebound in demand for commodities was supporting the economic recovery, and that it expects Russia's gross domestic product to match pre-pandemic levels as early as this quarter.
Write to Paul Hannon at firstname.lastname@example.org
(END) Dow Jones Newswires