Friday’s meeting of the Central Bank of Russia saw it maintain its monetary policy and keep its key rate at 20%. But, they warned of uncertainty in an economy undergoing a large-scale structural transition.

Just after the Russian invasion of Ukraine in late February, there was an explosion. CBR more than doubled the country’s key interest rateIn an attempt to support its plummeting currency and to mitigate the effects of harsh international sanctions, it will increase its percentage to 9.5% to 20%

CBR Friday’s statement stated that sharp increases in the key rate have “helped to sustain financial stability”.

It stated that the Russian economy was entering a phase of large-scale structural change. This will be accompanied, however, by an inexorable period of higher inflation. The increase is mainly due to changes of relative prices for a broad range of goods, and services.

“The Bank of Russia’s Monetary Policy is designed to allow a gradual adjustment of the economy to different conditions, and to return to 4% annual inflation in 2024.”

It rubleThe dollar fell to new lows after a torrent of sanctions and penalties were imposed by Washington and its allies on Moscow. However, the situation has been improving in the last few weeks. Following Friday’s announcement, the currency stood at just over103 against the dollar.

Reuters reports that Russia was able to avoid a major debt default earlier this week by paying some sovereign bonds in dollars. On Friday, the Russian finance ministry stated that it has fulfilled its obligation to fully pay coupon on Eurobonds denominated in dollars.

Western sanctions were used to target large amounts of foreign currency reserves held by the CBR. This was in order to make them virtually unaccessible and prevent policymakers from mitigating depreciation in domestic assets.