MOSCOW, June 11 Reuters Russias central bank increased its key interest rate to 5.5 on Friday, increasing the cost of lending for the third time this year due to rising inflation and said more hikes would be needed.
The decision to raise the rate from 5 was in line with a majority of analysts polled by Reuters beforehand, who predicted the central bank would opt for a 50basis hike after a higherthanexpected inflation readout.
Annual consumer inflation, the central banks main area of responsibility, overshot expectations and accelerated to 6.0 in May, reaching its highest since October 2016 when the key rate was at 10.
The central bank, whose analysts have warned inflation is on track to speed up further, said it would consider more monetary tightening after raising the key rate to the level it was at in April 2020.
Increased inflationary pressure in the context of the completing economic recovery can lead to a more substantial and prolonged deviation of inflation upward from the target, the central bank said in a statement.
This creates the necessity of further increases in the key rate at the upcoming meetings.
Rate increases have became more necessary after the rouble took a hit from a new wave of Western sanctions. Inflationary expectations among Russians have reached a fouryear high with the pace of economic growth exceeding expectations.
The central bank said inflation climbed to 6.15 as of June 7 and would only return to its 4 target in the second half of…