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Panicked after the ruble drops below a penny, Russia saves Vladimir Putin from the currency’s humiliating collapse with an emergency hike

Not even Fed Chairman Jay Powell can be accused of ever getting this far so quickly.

In an emergency meeting on Tuesday, the Governing Council of Russia’s central bank decided to raise interest rates by 3.5 percentage points to 12%. This move is intended to support the ruble, which has been significantly impacted by Western sanctions in response to the conflict in Ukraine.

“This decision is aimed at mitigating price stability risk,” it said in a statement, justifying its second hike in less than a month by citing “substantial” upside risks to inflation from the collapsing currency.

Just four days earlier, a deputy governor had brushed aside concerns about the exchange rate in remarks to state news agency TASS.

The move comes after the country’s ruble broke below the psychological lower limit of 100 to a US dollar, making each worth less than a penny.

The currency has now relinquished all of its gains from last year at depths not seen since investor panic in the early days of the war.

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Pressure on the bank then rose to fever pitch, with the Kremlin spokesman and Putin ally Vladimir Solovyov demanding on his Russian state television program that the central bank take action.

Prior to the invasion of Ukraine in February 2022, Putin’s industries had long depended on the West. In exchange for selling commodities such as food, energy and base metals such as nickel, Russia could buy the machinery and equipment it needed to run its factories.

Western sanctions, however, have crippled manufacturers’ ability to care for their consumers by limiting access to key intermediates, including microchips, that could help them expand production.

In its statement on Tuesday, the bank blamed consumers for increasingly having to look abroad to meet their demand for finished goods.

This put heavy downward pressure on the ruble and threatened the central bank’s price stability target of 4% as imported inflation now spills over into the wider economy.

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Raising the key policy rate to 12% from a previous 8.5% so soon after a July hike is a tacit admission that the bank’s most recent 100 basis point step less than four weeks ago was far from enough to trigger a . bottom under the ruble.

Even when Fed Chairman Powell was fully in the fight against inflation, he only hiked at a pace of 75 basis points for four consecutive meetings that spanned the space of six months.

This story was originally on Fortune.com

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