Russia’s central bank raised interest rates by 350 basis points to 12 percent on Tuesday, an emergency move aimed at preventing the ruble from falling below 100 against the dollar, following public calls from the Kremlin to tighten monetary policy.

The central bank held an extraordinary meeting on interest after the ruble fell below 100 against the dollar on Monday due to the impact of Western sanctions on Russia’s trade balance and an increase in military spending. Reuters.

Maxim Oreshkin, an economic adviser to President Vladimir Putin, criticized the central bank on Monday for what he described as the bank’s deflationary policy for the ruble’s fall.

Hours after Oreshkin’s speech, the ruble fell to 102 against the dollar and the central bank announced an emergency meeting.

“Inflationary pressures are rising,” the bank said in a statement on Tuesday. “This decision aims to reduce risks to price stability.”

“The ruble’s impact on prices is strengthening and inflationary expectations are rising,” he added.

The ruble has lost about 30 percent of its value against the dollar since the start of 2023, at a time when Russia has been hit by a decline in export earnings and a rise in import costs and military spending, according to AFP.

The ruble’s continued decline in recent weeks has raised concerns among many Russians about their standard of living in light of inflation, sanctions and the rising financial cost of the war in Ukraine.

In light of the sharp decline in earnings resulting from the export of hydrocarbons, the past few years have seen inflation return to 4.3 percent in July, parallel to the depreciation of the national currency.

Given this situation, the central bank was forced on July 21 to raise its key interest rate to 8.5 percent in an effort to combat rising prices.

From last Thursday until the end of the year, he stopped buying foreign currencies in the national currency market.