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Ruble's Rescue Comes at a Cost

Analysts expect 'serious monetary shock' from Russian efforts to stabilize currency by raising interest rates.

By Ksenia Galouchko and Lyubov Pronina, Bloomberg | Updated on December 22, 2014

Russian policy makers are signaling they’re prepared to sacrifice economic growth in order to stabilize the ruble.

Last week the Bank of Russia raised its benchmark interest rate by the most in 16 years and created a money-market cash squeeze, helping the ruble strengthen 45 percent from a record low on Dec. 16. The consequence of this means the oil producer’s economy may shrink 7.9 percent in 2015, Danske Bank A/S said on Dec. 19, revising a view for a 1.8 percent contraction.

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