With market watchers expecting no moves from the Russian central bank today, and just one week after Russia’s PM Dmitry Medvedev hinted that Russian rates are “too high”, the Russian central bank became the latest to defy politicians – and consensus – when it unexpectedly hiked interest rates for the first time since 2014, following many other emerging market peers who have been forced to tighten in response to the Fed, as inflation risks mount with a slumping currency and threats of U.S. sanctions.

Russia’s benchmark was raised by 25bps to 7.5% from 7.25% with only two of 42 economists expecting an increase, and 40 calling for no change. Russian central bankers said they will also “consider the necessity of further increases.” At 3pm Moscow Time, central bank governor Elvira Nabiullina will hold a news conference followed by the release of the latest economic  forecasts.

With today’s surprise hike, the Bank of Russia reversed four…

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