Russia raises key interest rate to stem inflation

AP News
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Posted: Feb 25, 2011 6:56 AM
Russia raises key interest rate to stem inflation

Russia has raised its key interest rate for the first time since 2008 due to concerns over accelerating consumer price increases.

The Central Bank on Friday raised the benchmark refinancing rate to 8 percent from an all-time low of 7.75 percent, responding to "continued high inflation expectation."

Russia started to cut rates in late 2008 when the global downturn hit the economy and slowed price increases in the country. Inflation, however, shot up last year after a severe drought hurt harvests across central Russia.

Finance Minister Alexei Kudrin this week called for banking authorities to act in order to meet the inflation target of 7 percent _ as of January it was at 9.6 percent.