The central bank's explanation states that inflation in Russia is significantly higher than anticipated, and inflation expectations are on the rise.
The last time the key rate in Russia was at this level was in 2003, following several years of decline (it stood at 150% since 1998), as noted by "Radio Liberty".
According to investment banker Yevgeny Kogan, the decision made by the Bank of Russia is a "capitulation to inflation," he remarked in a comment to The Moscow Times. The publication reports that annual inflation, according to Rosstat data, is slowing down (from 9.1% in July to 8.5% as of mid-October), but monthly price growth rates remain high: 0.48% in September and 0.46% for the first two weeks of October. Price increases have surpassed the Russian regulator's target by more than twice, as pointed out by Bloomberg.
Kogan stated that with today's decision, the central bank of the aggressor country acknowledged its inability to bring price growth back to its target not only this year but also next year. Furthermore, the Bank of Russia has raised its forecast for the average key rate by the end of this year to 21–21.3%. This suggests that during the meeting on December 20, the rate could be raised immediately to 23%, according to analysts cited by The Moscow Times.