OREANDA-NEWS Following an extraordinary meeting on Tuesday, August 15, the Board of Directors of the Bank of Russia decided to raise the key rate by 3.5 percentage points to 12 percent. This is stated in a message on the regulator's website.

The reason for the sharp tightening of monetary policy is the limitation of risks to price stability. The central bank pointed to an increase in inflationary pressure — over the past three months, the current seasonally adjusted price growth was 7.6 percent, and the indicator reached 4.4 percent since the beginning of the year. At the same time, the rate of price growth is accelerating.

At the previous meeting on July 21, the Central Bank made the first rate change since September last year, raising it by another percentage point to 8.5 percent. Then the regulator did not rule out the need for additional tightening of monetary policy during further meetings.

In less than a month, the Russian currency has weakened by more than 10 percent. The Central Bank pointed out that the main reason is the weakening of export revenues, as well as the restoration of imports. However, on Monday, August 11, Russian presidential aide Maxim Oreshkin said that the reason for the low ruble exchange rate is too low a rate, and a strong national currency helps the Russian economy.

After the announcement of the extraordinary meeting, the ruble began to strengthen sharply. During Monday evening and Tuesday morning, the Russian currency increased by more than five percent.