Central Bank of Russia hikes policy rate to 6.5%, USD/RUB trades below 74

Following the decision to hike the policy rate by 100 basis points to 6.5%, Russian central bank chief Elvira Nabiullina said on Friday that their monetary policy will not restrain the economic growth in Russia, as reported by Reuters.

Additional takeaways

"New OPEC+ agreement will contribute to Russia's economic growth in 2021 and 2022."

"We see signs of overheating in unsecured retail lending."

"Average key rate is seen at 6-7% in 2022."

"We did not consider raising rates by 25 bps today."

"We considered raising rates by 50 and 75 bps today."

."We see no feasibility in raising inflation target from 4%."

Market reaction

Despite the large increase in the policy rate, the USD/RUB pair's reaction was largely muted and it was last seen posting small daily losses at 73.5660.