Russia’s central bank delivers surprise interest rate cut

The decision to raise the rate from 4.5 percent to 5 percent comes amid a weak rouble, high inflation and flaring geopolitical tensions.

Russia’s central bank raised its key interest rate to 5 percent on Friday, a bigger-than-expected jump against the background of a weak rouble, high inflation and geopolitical risks, signalling that more rate hikes would follow. The decision to raise the rate from 4.5 percent was at odds with projections from the majority of analysts polled by Reuters news agency, who predicted a moderate 25-basis-point increase after a new wave of sanctions hit the rouble and inflation showed little signs of slowing. “The rapid recovery of demand and elevated inflationary pressure call for an earlier return to neutral monetary policy,” the bank said in a statement.