As tensions in Ukraine following Russian invasion escalate, Russia's central bank on Monday sharply raised its key policy rate to 20 per cent, a day after announcing a slew of measures to support domestic markets, as it scrambled to manage the fallout of harsh Western sanctions.
The bank hiked the key rate from 9.5 per cent to counter risks of rouble depreciation and higher inflation, and also ordered companies to sell 80 per cent of their foreign currency revenues.
"External conditions for the Russian economy have drastically changed," the central bank said in a statement, adding that the rate hike 'will ensure a rise in deposit rates to levels needed to compensate for the increased depreciation and inflation risk."
Several European subsidiaries of Sberbank Russia, majority owned by the Russian government, are failing or likely to fail due to the reputational cost of the war in Ukraine, the European Central Bank, the lenders' supervisor, said on Monday.
Central banks had been positioned for a head-on fight against inflation while expecting continued strong economic growth. But now, post-pandemic monetary policy has been thrown into doubt by Russia's invasion of Ukraine, a geopolitical upheaval likely to be felt differently across the world's major economic centres.
Here are the key rates of major central banks in world:
Turkey: Russia's invasion of Ukraine could derail President Tayyip Erdogan's new economic programme by slashing tourism revenues seen vital to reducing the gaping current account deficit and pushing up inflation via rising energy and grains costs.
However, in January, the country's central bank had voted to keep its benchmark interest rate steady at 14 per cent.
England: In its last policy meeting in February, the Bank of England raised interest rates for a second time in three months, to 0.5 per cent, as it had warned that surging energy bills would push inflation higher than expected, to more than 7 per cent by April. The central bank said it would continue to raise rates this year and next, to 1.5 per cent by mid-2023.
ALSO READ: Ukraine crisis: Crude oil prices jump, Russian rouble sinks to record low
India: In the last monetary policy review of the current financial year, the Reserve Bank of India by Governor Shaktikanta Das decided to maintain the status quo on key policy rates for the 10 consecutive time.
"Monetary Policy Committee (MPC) has unanimously decided to keep the repo rate unchanged at 4 per cent," the RBI Governor said in his Monetary Policy Statement. The repo rate is the interest rate at which the RBI lends short-term funds to banks.
Moreover, as per reports, the central bank will likely continue with its accommodative stance and hold interest rates despite geopolitical risks in the wake of the Russia-Ukraine conflict in the next policy meet.
United States: The US Federal Reserve would now likely limit itself to a quarter percentage point rate increase at its March meeting, ruling out the half point hike some policymakers have favoured, wrote analysts with Evercore ISI.
ALSO READ: Fallout on global finance: ECB warns on Sberbank; Russian issuers dropped
With inflation at its hottest level in two generations, the Fed is widely expected to seek to cool the economy by raising its benchmark short-term interest rate in March from its record low of nearly zero per cent, where it's been throughout the pandemic.
European Union: The European Central Bank (ECB) has kept key interest rates unchanged despite record rises in inflation.
The central bank’s benchmark refinancing rate remains at 0 per cent, the rate on its marginal lending facility sits at 0.25 per cent and the rate on its deposit facility was kept at -0.5 per cent.
The headline eurozone inflation was 5.1 per cent in January, while the core inflation was 2.3 per cent.
Moreover, high inflation in the United States and elsewhere makes it unlikely the Federal Reserve, the European Central Bank, and the Bank of England will fully pause what has been a joint turn towards tighter monetary policy, news agency Reuters had reported earlier.
(With agency inputs)