31.08.201009:20:00UTC+00Russia's Central Bank Leaves Key Interest Rate Unchanged

Russia's central bank on Tuesday retained its refinancing rate at 7.75% saying that recent spike in inflation do not pose risks to the medium or long term inflation.

Annual inflation rose to 5.9% as of August 23 from 5.5% recorded in July. Yesterday, the country's finance minister Alexei Kudrin said monetary policy tightening is not needed now, as the current increase in inflation is triggered by the worst ever heatwave and drought.

According to him, current interest rate is appropriate and a rate hike now will not cool inflation, as it is driven by adverse weather conditions. The bank has reduced the rate fourteen times between April 2009 and June 2010.

Last week, the Russian government revised up its inflation forecast. According to latest forecast, inflation would be between 7%-7.5% this year, higher than the earlier forecast of 6%-7%. The estimate for next year has been revised up to a range of 6%-7% from 5.5%-6.5%.

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