May 6, 2023

Ukraine's President Volodymyr Zelensky has denied his country carried out an alleged drone attack on the Kremlin, which Russia says was an attempt on President Vladimir Putin's life.

"We don't attack Putin or Moscow. We fight on our territory. We are defending our villages and cities," he said, speaking on a visit to Finland.

The Russian president's office said defences downed two drones overnight.

It threatened to retaliate when and where it considered necessary.

Unverified footage circulating online shows smoke rising over the Kremlin - a large government complex in central Moscow - early on Wednesday. A second video shows a small explosion above the site's Senate building, while two men appear to clamber up the dome.

The Russian presidency said Ukraine had attempted a strike on Mr Putin's residence in the Kremlin and described it as "a planned terrorist act and an assassination attempt on the president".

Officials said two drones targeting the complex had been disabled using electronic radar assets, adding that President Putin had not been in the complex at the time of the alleged attack.

But Ukraine has said the Russian accusations are merely a pretext for massive attacks on its territory and the US says it is treating the Russian claims with a lot of caution.

Kremlin drone attack highly embarrassing for Moscow
What do we know about drone attacks in Russia?
Mr Putin appears to be one of the most closely-guarded leaders in the world. At Putin events in Moscow attended by BBC journalists, extremely tight security has been in place, including extensive checks and long convoys of vehicles with airspace closed and traffic halted.

However if what the Kremlin is saying is true, it will raise questions about how well protected the president really is.

There will also be scrutiny over the effectiveness of Russian air defences. In recent months, anti-aircraft systems have been spotted on Moscow rooftops in the vicinity of key buildings.

They have been placed there because the Kremlin is concerned that Ukraine, or those sympathetic to Ukraine, may attempt to carry out aerial attacks on high-value targets.

Whatever actually happened on Wednesday morning, the question now is how Russia will respond. Some officials have already called for tough action. Russian generals have warned many times of harsh responses to any strikes on Russian territory.

But it is unclear whether Russia has the capacity to carry out meaningful retaliatory strikes, or whether this incident will lead to any significant escalation on the battlefield inside Ukraine.

A Ukrainian presidential adviser told the BBC the incident indicated Russia could be "preparing a large-scale terrorist provocation" in Ukraine.

Mykhailo Podolyak said attacking Moscow made no sense for Ukraine but would help Russia justify its own attacks on civilian targets.

On Wednesday Russian strikes on Ukraine's southern Kherson region killed 21 people. Mr Zelensky said the shelling had hit "a railway station and a crossing, a house, a hardware store, a grocery supermarket and a gas station". The victims included supermarket customers and employees of an energy company who were performing repairs, officials said.

Mr Podolyak added that any drones flying over locations in Russia were down to "guerrilla activities of local resistance forces".

"Something is happening in RF [Russian Federation], but definitely without Ukraine's drones over the Kremlin," Mr Podolyak said.

The US central bank has raised interest rates to the highest level in 16 years as it battles to stabilise prices.

The Federal Reserve increased its key interest rate by 0.25 percentage points - its 10th hike in 14 months.

The Fed signalled that Wednesday's rise may be its last one for now.

The moves have pushed its benchmark rate to between 5% and 5.25% - up from near zero in March 2022.

Higher rates have sharply raised borrowing costs across the world's largest economy, spurring a slowdown in sectors such as housing and playing a role in the recent failures of three US banks.

"We're no longer saying that we anticipate" additional interest rate increases, Federal Reserve chair Jerome Powell said at a press conference after the announcement, calling it a "significant change".

However, he refused to rule out further action, saying: "We'll be driven by incoming data."

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