Russia's first post-occupation interest rate hike

The Central Bank of Russia signed an increase in the policy rate that went beyond expectations.

The bank raised the policy rate by 100 basis points to 8.50 percent. Economists expected the interest rate to be increased by 50 basis points.

"The Bank of Russia keeps open the possibility of raising interest rates at its next meetings in order to stabilize inflation at a level close to 4 percent in 2024 and beyond," the text of the decision said.

The failed Wagner rebellion in June added to pressure from deteriorating foreign trade, causing the ruble to become one of the worst-performing currencies among emerging markets against the dollar this year.

"Given the strong capital outflows and diminishing support for the currency from the country's current account surplus, a rate hike alone is unlikely to prevent further ruble depreciation," the sources said.