Russia's central bank raised interest rates on its deposit operations by 25 basis points on Friday, taking a first step to tighten its loose policy stance to contain surging inflation. However it left the cost of lending operations - including the benchmark refinancing rate - unchanged.
"Inflation risks, as determined by monetary conditions, remain moderate but deserve greater attention from the authorities," the central bank said in a statement, adding that economic recovery remains on track. "The change, according to Bank of Russia's estimates, will not lead to a significant increase in the cost of funds for end borrowers."
The overnight deposit rate will be raised to 2.75 percent, as of Monday, from 2.50 percent. The refinancing rate remains at 7.75 percent. Most analysts had expected no change, but eight of out of the 19 analysts polled by Reuters earlier this week had forecast a hike in the overnight deposit rate. Some had also expected an increase in the refi rate.
The rouble and the Russian money market were positioned for a rise. Weekly inflation accelerated in the latest week to 0.3 percent, bringing the year-to-date figure to 8.4 percent as a supply shock caused by this year's failed harvest feeds through to consumer prices. Ahead of the decision, central bank governor Sergei Ignatyev told lawmakers that he was "worried about inflation," although its spike was mostly caused by a rise in food prices after the worst drought in over a century.
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