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Sanctions Risk May Prompt First Russian Rate Hike Since 2014

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Russia’s central bank, one of a handful in Europe to cut interest rates this year, could increasingly consider a hike after the ruble slumped following the latest U.S. sanctions and the risk of more to come.

The currency’s worst week since the 2015 oil crash and the price pressures it threatens to unleash are adding to the Bank of Russia’s long worry list after it already delayed plans to shift to a looser stance this year. With Governor Elvira Nabiullina previously indicating that all options will be on the table in case of “a sharp strengthening in pro-inflationary risks,” an increase in borrowing costs may be in play in the months ahead, according to economists including Credit Suisse Group AG’s Alexey Pogorelov.