Russian Central Bank Faces Pressure Ahead of Rate Hike Decision

The Russian central bank is poised to raise interest rates amid mounting opposition, including objections from corporate executive Igor Sechin. Analysts predict a 200 basis points hike to 18% to tackle inflation and an overheated economy. Critics argue the policy might stifle economic growth despite easing inflation.

The Russian central bank's independence is under scrutiny as it prepares to hike interest rates on Friday amidst pressure from opponents, including Igor Sechin, Russia's top corporate executive. Sechin suggests the central bank take cues from China's recent rate cuts.

Analysts surveyed by Reuters forecast a 200 basis points hike to 18%, marking the highest rate since April 2022, when it hit 20% following the Kremlin's military action in Ukraine. This stance has faced backlash, with Sechin advocating a similar approach to China to support corporate borrowers and spur growth.

Governor Elvira Nabiullina, who has maintained the central bank's independence with Putin's backing, is focused on combating inflation, now over 9% annually. Amidst labour shortages and wage growth issues, the central bank's policies aim to manage the impact of Western sanctions while critics call for more growth-oriented measures.

(With inputs from agencies.)