Russia Shocks With Emergency Rate Hike, Boosts Interest Rate From 10.5% To 17%

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Russia Shocks With Emergency Rate Hike, Boosts Interest Rate From 10.5% To 17% (ZeroHedge, Dec 15, 2014):

Following the biggest rout to the Ruble in ages, Russia – unlike Mario Draghi – instead of talking the talk decided to walk the bazooka walk and shocked all those long the USDRUB by unleashing an emergency rate hike (at 1 am in the morning) from the recently raised interest rate of 10.50% to… hold on to your hats… 17.00%, a 650 bps increase!

From the press release:

The Board of Directors of the Bank of Russia has decided to increase from December 16, 2014 the key rate to 17.00% per annum. This decision was driven by the need to limit significantly increased in recent devaluation and inflation risks.

In order to enhance the effectiveness of interest rate policy loans secured by non-marketable assets or guarantees for a period of 2 to 549 days from 16 December 2014 will be granted at a floating interest rate established at the level of the key rate of the Bank of Russia increased by 1.75 percentage points (Previously these loans for a period of 2 to 90 days, provided at a fixed rate).

In addition, to enhance the capacity of credit institutions to manage their own currency liquidity was decided to increase the maximum amount of funds to repurchase auctions in foreign currency for a period of 28 days from 1.5 to 5.0 billion. US dollars, as well as on similar operations for a period of 12 months on a weekly basis.

And for the Russian-speakers, the full breakdown of rates.

Bank of Russia move

Few markets are open but the 1month forward Ruble market just dropped (Ruble rallied) over 2.5 handles…

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RSX (ETF) is starting to rally after-hours…

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Chart: Bloomberg

 

1 thought on “Russia Shocks With Emergency Rate Hike, Boosts Interest Rate From 10.5% To 17%

  1. Back in the days when central banks actually worked for the real economy, not just greedy guts, I remember when the FED raised rates to 18%, then 22%. Inflation was taking off, back then, we still had affordable houses for people to buy…….it shut down housing for a while, but it cleared out a lot of problems. Yes, it was painful, I remember it well. Now, the FED no longer has international clout, they sold themselves out to greedy gut corporations. So, regardless the rest of the world is fighting inflation and deflation by raising rates, the FED leaves it low because of all its illegal gambling…..

    Money is moving east. One way to get more money is to raise rates for people who want a better return on their money. It is brutal, but the Russians want to be a world power again, and as long as they believe he is doing that, Putin will remain king of Russia. The US would give anything to destabilize and destroy him, he has destroyed the US hammer hold on the world. The US is now insignificant and corrupt…………nobody trusts it. Many trust Putin, he has released them from US dominated financial markets. Member nations of BRICS can trade with each other, leaving the dollar out. This has destroyed the US dollar, and there is nothing they can do to stop it.
    These higher rates will bring more money into Russia. If our FED gave one damn for the people, they would endeavor to bring money into the US instead of gambling on Wall Street. They are so greedy, they don’t seem to understand what has happened to them.
    They have tanks moving on Russia. If they hit any part of it, the EU will dump the dollar as well, and the dollar will collapse. With a collapsed dollar, military spending drops dramatically. The American people don’t want more wars, but have no say what these idiots do.
    Russia will survive and prosper. It will have rough patches, but the world economy is in depression thanks to the US greedy guts, and every person who has lost a home (in the US and overseas), job, portfolio……..rightfully blame the US greedy guts.
    The US is despised. If it persists in military attacks on Russia, China, Japan, Iran and much of the world will join Russia to beat the US. The US will lose this war if they are mad enough to try it.

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