Russia's central bank under pressure to hike rate as rouble

Russia's central bank was under intense pressure today to raise its key rates to stem the rouble's rapid slide and slow rising prices, although the move carries a risk of further strangling the economy.
The bank's board is expected at 1030 GMT to publish its monthly monetary policy decision, and analysts are expecting it to hike the rate from the existing 9.5 per cent, in what would be the second increase of the lending rate since the end of October.
Even though the bank has poured billions of dollars into stabilising the rouble, Russia's currency continued its depreciation, hitting another record low today morning, breaching 55 to the dollar and trading at 68.48 to the euro.

The rouble has lost over 40 per cent of its value against the dollar since the beginning of the year, hammered by falling oil prices and the impact of Western sanctions against Moscow over the conflict in Ukraine.
Russia has spent over USD 5 billion so far this month on market interventions to help the rouble, and concern is growing at the rate of depletion of its foreign currency reserves, which are down 20 percent since the summer of 2013.
Public concerns are also mounting over rising inflation -- predicted officially to be 9 per cent for the year but which is likely to balloon into double digits according to analysts.

The situation has "experts calling for a 100-200 basis point hike while traders expect an increase of 200-400 basis points," Alfa Bank said in a research note ahead of the decision on Wednesday.
"The pressure to deliver bold policy action has increased significantly over the last two weeks, following the brisk decline in oil prices and consequent pressure on the currency," said VTB capital.
Russian President Vladimir Putin last week blamed the rouble's fall on "speculators" while Prime Minister Dmitry Medvedev yesterday warned against "hysterics", assuring Russians that he keeps his own savings in the national currency.