Russian borrowers set for rates rise

Borrowing money in Russia may cost more in 2008, as Russia begins to feel the effects of the international liquidity squeeze.

In late summer, inter-bank interest rates more than doubled. The overnight rate has since averaged more than 6 percent, versus less than 4% earlier in the year.

Russia's Central Bank has tried to soften the blow by pumping cash into the banking system.

But the regulator's head Sergey Ignatyev told RT on Wednesday the cost of borrowing money in Russia may rise in the medium term.

“The problems on the international financial markets may lead to higher interest rate, for the banks themselves and as a result for their customers,” emphasized Ignatyev.