After the key interest rate reached a record high at the end of 2024, the Central Bank of the Russian Federation quickly and steadily lowered it from 0.25 basis points to 1-2 basis points. So today this trend ends, within the framework of the central bank board meeting decision has been made Keep the key interest rate at the previous level of 14%.
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Regulators justified the decision by citing an acceleration in inflation over the past few months, under which the decision to keep key interest rates at their current very high levels will help keep overall inflation within the limits of the central bank’s plan.
There are two things to understand here. On the one hand, maintaining a higher key rate stimulates savings and capital accumulation, since the most conservative forms of investment – bank deposits and government bonds – are based on the key rate in terms of profitability.
On the other hand, high key interest rates reduce the attractiveness of loans and hit the real economic sector. Previously, it was expected that Russia’s key interest rate would be around the usual 8% by the end of the year, but it is clear that this process will now move to the right indefinitely according to the timetable.