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Russian central bank warns US Tariff hikes could slow global growth

Russian central bank warns US Tariff hikes could slow global growth

The Russian central bank warned on Wednesday that U.S. tariff increases could slow world economic growth, fuel inflation and cause oil prices to be lower than expected for several years due to reduced global demand.

On Wednesday, President Donald Trump announced "Liberation Day", a day of celebration in the United States. This would escalate a trade conflict with other countries, increase costs and threaten a decades-old trading order.

The Russian regulator warned that "the increase in import duty in the USA, and the retaliatory actions by other countries, have increased the risks of a slowerdown in global growth and an acceleration in inflation."

The expectation of a lower global demand is already exerting pressure on commodity prices. It added that the risks of oil prices falling below the baseline forecast for February in the future have increased.

The comments, which were published on Wednesday, came from the latest board meeting held on March 21. The participants in the meeting said that although inflationary pressure was lower due to a weaker rouble and a decrease in domestic demand, it remained high.

Since the beginning of the year, the rouble has gained around 25% against the U.S. Dollar. The central bank suggested that the rise could be attributed to the ease of tensions between Russia, the United States and other countries.

The strengthening of the rouble may have been due to an increased interest in Russian assets in light of a better geopolitical environment. It said that this interest could have been driven by the higher interest rates in Russia in comparison to other countries. Reporting by Elena Fabrichnaya; writing by Gleb Brianski; editing by Mark Trevelyan

(source: Reuters)