Putin aware of discontent with interest rate hikes, but fears Turkish scenario

The Bank of Russia for the seventh time in a row on December 17 raised its key rate, tightening the step to one percentage point

Russian President Vladimir Putin is aware of the dissatisfaction of the real sector with the increase in the discount rate of the Russian Central Bank, but believes that otherwise, the Turkish scenario will repeat in the country, Qazet.az informs.

“Every day, I am in contact with people from the real sector of the economy. I know how they scold the Central Bank, their arguments. But if we do not do this, it can be like in Turkey,” Putin said at a traditional big press conference in Moscow.

In his opinion, this is a serious issue, a serious challenge.

"We need to be careful to use this tool. But the Central Bank is pursuing an independent policy. You may find it strange, I do not interfere in the work of the Central Bank, but I assess it positively," the president said.

The Turkish lira exchange rate has been falling for a long time, but the Central Bank of this country has consistently reduced the discount rate.

The Bank of Russia for the seventh time in a row on December 17 raised its key rate, tightening the step to one percentage point.

"On December 17, 2021, the Board of Directors of the Bank of Russia decided to raise the key rate by 100 basis points, to 8.50% per annum," the message said.

This increase in the key rate was the highest since September-October 2017. In mid-October, the Central Bank raised its key rate by 75 basis point to 7.5% per annum.

According to the regulator's forecast, inflation in the Russian Federation at the end of 2022 will be 4-4.5% in annual terms.