MOSCOW, November 5. /TASS/. The Russian Central Bank’s recent decision to raise its key rate by 150 basis points to 9.5% will help stabilize inflation by the end of the first quarter of 2015, Central Bank First Deputy Chairwoman Ksenia Yudaeva said on Wednesday.

“This step (the key rate hike) will certainly help ensure that inflation stabilizes until the end of the first quarter and then starts to go down,” Yudaeva said.

The key rate hike should also reduce pressure on the foreign exchange market, she said.

“The key rate increase should exert pressure on the market. Borrowings should become more expensive and, correspondingly, the pressure on the foreign exchange market should decrease to the extent it was related to the presence of cheap ruble liquidity,” Yudaeva said.

A further key rate hike is not ruled out in Russia, she went on to say.

“I would not rule out at present that prevailing factors will cause a further rate hike,” Yudaeva told journalists.

Central Bank’s rationale for rate hike

The Russian regulator said in a statement on Friday that both internal and external factors prompted its decision to raise the key rate by as much as 150 basis points.

External conditions changed considerably in September-October: world oil prices slumped and some Western countries tightened their sanctions against major Russian companies, the regulator said, giving motives for its rate decision.

“In these conditions, the ruble was weakening and this factor, along with restrictions imposed on the imports of some foodstuffs in August, contributed to further accelerated growth in consumer prices,” the regulator said.

At its previous policy meeting on September 12, the Central Bank of Russia kept the key rate unchanged at 8%, although experts expected a slight rate increase from the regulator.

The Russian Central Bank raised the key rate three times this year: to 7% from 5.5% in March, to 7.5% in April and to 8% in July.

Ruble strengthens sharply against dollar and euro

The US dollar fell to 43.95 and the euro to 54.9 against the ruble on the Moscow Exchange on Wednesday after the Central Bank will continue interventions on the domestic foreign exchange market until the ruble switches to a free float.

“The Central Bank is not giving up its presence on the foreign exchange market. We are changing operations for those, which we believe are more appropriate in current conditions,” Yudaeva said, commenting on the regulator’s package decision on the key rate, foreign currency repo deals and the curtailment of foreign currency interventions.