Russia lifts key interest rate to stem inflation, support currency amid concerns over Ukraine

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MOSCOW – Russia’s central bank has unexpectedly raised its key interest rate in a bid to stem inflation and support the currency as the country faces increasing economic pressure over its policies in Ukraine.

The bank said Friday it has lifted its one-week auction rate by 0.5 percentage points to 8 per cent. The central bank cited “heightened geopolitical risks” that are likely to push down the Russian ruble, fueling consumer price inflation. Higher rates tend to support a currency but can hurt economic growth.

The rate has risen from 5.5 at the beginning of the year. That has helped support the ruble after a period of weakness, but growth is sliding.

The United States last week imposed tougher sanctions on Russia over its alleged unwillingness to help end the conflict in Ukraine.

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