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Kopeck-Pinching as a Monetary Cure for Inflation Hounding Russia

  • Central bank wants to encourage saving by keeping rates high
  • Wage increases and falling deposit rates may rekindle spending
Updated on

The Bank of Russia is on guard should the nation want to go back to its old free-wheeling habits.

After months of warning about salary increases, the central bank is committing to tighter policy to contain any spillovers into inflation, saying after its meeting in late July that borrowing costs will be held at a level that “encourages saving” and keeps a lid on prices and expectations. Real deposit rates, together with growth in retail savings, could be “the major policy determinants going forward,” according to ING Groep NV. Wages adjusted for inflation added 0.6 percent in July, climbing for a third month in the longest streak since 2014, the Federal Statistics Service said on Wednesday.