WASHINGTON (Reuters) - Inflationary pressures threaten Russia’s growth prospects, the International Monetary Fund said on Thursday, calling on Russia to raise benchmark interest rates and allow its currency to appreciate.

“Price rises now extend well beyond what can be explained by worldwide increases in food and energy prices, and are likely to exceed the authorities’ objective by a substantial margin,” the IMF said in a statement at the conclusion of Article IV consultations with Russia.
“Directors encouraged the authorities to tighten monetary policy, while noting that the peg of the ruble to a dollar-euro basket could become increasingly inflationary as Russia’s cyclical position strengthens relative to that of the U.S. and euro area economies,” the IMF said.
Sound management and high oil prices have contributed to the strong performance of the Russian economy, which has been expanding at an annual rate of more than 8 percent, the IMF said.