The Bank of Russia unexpectedly maintained its key interest rate at a record-high 21% , defying analysts’ expectations of another significant hike as inflation remains stubbornly elevated. The decision marks a shift toward a more measured approach in balancing economic growth and price stability. Key Details Inflation Concerns: Annual inflation climbed to 8.9% in November, well above the central bank’s 4% target , with inflation expectations reaching 13.9% in December. Policy Rationale: The central bank cited the significant tightening of monetary conditions after October’s 200-basis point hike as sufficient to resume disinflationary processes. Governor Elvira Nabiullina emphasized avoiding both economic overheating and severe slowdowns. Economic Overheating: Elevated government spending on the war in Ukraine and social programs, coupled with labor shortages and rising wages, have fueled strong domestic demand, exacerbating price pressures...
The Ringgit weakened against the USD and this trend seems to continue and show no sign of slowing down.
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| USD against MYR currency |
A quick search on google will show you this and it's scary because the spike doesn't seem to slow down and there's no sign of it any time soon.
And to make matters worse, the BNM International Reserve as of July 2015 has shrunk below US$100 billion.
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| BNM International Reserves shrunk below US$100 billion |
To put into perspective, this is the first time that the reserve has fall below this level since August 2010.
The central bank gave a statement today and said the reserves' position is sufficient to finance 7.6 months of retained imports and is 1.1 times the short-term external debt.
The concern on the Ringgit currency is real as it has depreciated for 8 consecutive days.
The local currency slipped further today to 3.9265 against the US dollar — the lowest level in 17 years — compared with Thursday's closing of 3.9125.
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