The refinancing rate is the amount of annual interest under which banks take loans from the Central Bank of the Russian Federation for their further provision to organizations and individuals in the form of loans and credits. The rate is periodically adjusted to stabilize the situation in the economy. How does this indicator work, what is the refinancing rate set for 2017 by the Central Bank of the Russian Federation, and how can it change in the near future?
What affects the refinancing rate
Ordinary commercial banks act as intermediaries between their clients and the Central Bank: they borrow funds from the Central Bank at the current interest rate, and then issue loans at an even higher rate to make a profit. When the bank returns the borrowed money, the Central Bank of the Russian Federation will also receive a profit due to the refinancing rate.
Before moving on to the Central Bank refinancing rate for 2017, let's consider how it is used to manage the state's monetary policy.
If the Central Bank decides to lower the refrigerant rate, loans from ordinary banks will also become cheaper. Decrease in consumer credit rates will increase the number of borrowers, which means that an increase in commodity demand will follow. Following the demand, prices rise, and as a result, inflation also rises.
To curb inflation, the Central Bank raises the refinancing rate and the same sequence works, but “with the opposite sign”: bank loans become more expensive, there are fewer borrowers, demand falls, prices stabilize, inflation slows down.
Where is the refinancing rate applied in 2017
Quite often, not only banks, but also entrepreneurs, as well as accountants, work with a rebate, for example, when:
- the taxpayer is granted a deferral or installment plan for paying tax and interest is charged on the amount of the debt (clause 4, article 64 of the Tax Code of the Russian Federation),
- penalties are calculated on taxes and other obligatory payments (1/300 of the Central Bank refinancing rate in 2017),
- personal income tax is calculated: from material gain, from interest on bank deposits, from voluntary life insurance contracts, from interest on loans received for transactions with securities, etc.,
- determine the amount of compensation to the employee for the delay in the payment of wages or the delay in returning the overdeducted amount of personal income tax,
- various penalties apply.
Refinancing rate: 2017
In 2013, the Central Bank introduced a key rate - this is the minimum percentage at which the Bank of Russia gives loans to banks for a week, and the maximum rate at which it accepts money from them for deposits. It depends on the key rate what interest banks set on their loans to borrowers. How does it compare with the refinancing rate of the Central Bank of the Russian Federation in 2017?
Today, speaking of the key rate, they also mean the refinancing rate. This is due to the fact that until 2016 it was set regardless of the key rate (in December 2015: 8.25% - refractive rate, 11% - key rate), but from January 1, 2016, the Central Bank of the Russian Federation decided to equalize both indicators. Refinancing rate 2016-2017 automatically became equal to the key rate (11% from 01/01/2016), which caused an increase in the size of payments dependent on the rerate, including penalties.
Subsequently, the key rate was reduced, and today it remains at the level of September 2016. The table below clearly reflects the dynamics and level of the refinancing rate in 2017.
Refinancing rate forecast for 2017
On February 3, 2017, the Board of Directors of the Central Bank of the Russian Federation decided to leave the key rate at 10.0%, although many predicted its reduction. It will remain so at least until March 24, 2017, when the next Council will be held.
Now many experts are talking about reducing the chances of refinancing the refinancing rate in 2017. In any case, there will most likely be no changes until the end of the first half of the year. By the end of 2017, inflation growth is forecast to decrease to 4%, and therefore there are no prerequisites for reducing the key rate of the Central Bank. If inflation remains at the current level of 5% throughout the year, then the Central Bank of the Russian Federation will not change the refinancing rate for 2017.
From January 1, 2016, the value of the refinancing rate of the Central Bank of the Russian Federation was equated to the value of the key rate of the Bank of Russia on the corresponding date. From January 1, 2016, the independent value of the refinancing rate is not set and is not displayed on the website of the Bank of Russia.Refinancing rate /Key rate/ of the Bank of Russia for today, i.е. from October 28, 2019 is - 6.50%., and from December 16, 2019 - 6.25%. The next Board of Directors of the Bank of Russia, held on December 13, 2019, decided to reduce the key rate by 25 bp to 6.25% per annum. This rate (6.25%) will remain in effect until February 07, 2020.
And since after December 31, 2015 the value of the refinancing rate corresponds to the key rate and is not set separately by the Bank of Russia, starting from December 16, 2019, the refinancing rate will also be 6.25%.
The previous key rate of the Bank of Russia was 6.50% and its validity period lasted about two months (from October 28, 2019 to December 15, 2019).
The previous unofficial refinancing rate was also valid from October 28, 2019 - to December 15, 2019 and corresponded to the key rate of this period (6.50% per annum).
Last officially established The Bank of Russia refinancing rate was valid from September 14, 2012 to December 31, 2015 and amounted to 8.25% per annum.
The transition to the key rate was made by the Board of Directors of the Bank of Russia, as set out in Bank of Russia Ordinance No. 3894-U dated December 11, 2015 “On the refinancing rate of the Bank of Russia and the key rate of the Bank of Russia”).
A from January 1, 2016, even the reference sounding of the refinancing rate by the Bank of Russia is no longer performed.
Refinancing rate of the Central Bank of the Russian Federation for December 2019 - February 2020
On December 13, 2019, the Board of Directors of the Bank of Russia decided to cut the key rate by 25 bp to 6.25% per annum. The refinancing rate (unofficial) was also reduced to 6.25% per annum.The Board of Directors of the Bank of Russia noted that the slowdown in inflation is happening faster than expected. Inflationary expectations of the population continue to decline. Price expectations of enterprises as a whole have not changed. The growth rates of the Russian economy picked up in the third quarter, but it is still difficult to assess their sustainability. The risks of a significant slowdown in the global economy remain. In the short term, disinflationary risks still prevail over proinflationary ones. Taking into account the ongoing monetary policy, annual inflation will be 3.5-4.0% in 2020 and will remain close to 4% in the future.
If the situation develops in line with the baseline forecast, the Bank of Russia will assess the feasibility of a further reduction in the key rate in the first half of 2020. The Bank of Russia will make decisions on the key rate taking into account the actual and expected inflation dynamics relative to the target, economic development over the forecast horizon, as well as assessing the risks from internal and external conditions and the reaction of financial markets to them.
When deciding to reduce the key/refinancing rate to 6.25%, the Board of Directors of the Bank of Russia proceeded from the following:
Dynamics of inflation. Inflation is slowing down faster than expected. The annual growth rate of consumer prices in November decreased to 3.5% (from 3.8% in October 2019) and, as of December 9, was estimated at about 3.4%. Annual core inflation in November also fell to 3.5% after 3.7% in October. Inflation indicators reflecting the most stable processes of price dynamics, according to the Bank of Russia, are close to or below 4%. At the end of 2019, the Bank of Russia forecasts inflation in the range of 2.9–3.2%.In November, disinflationary factors continued to have a significant impact on inflation. Annual rates of growth in prices for food and non-food products continued to decline. In terms of one-time factors, a high harvest and an expansion of supply in certain food markets contribute to maintaining low rates of growth in food prices, taking into account seasonality. The strengthening of the ruble, which has taken place since the beginning of the year, along with the slowdown in inflation in the countries - trading partners, limits the growth in prices for imported goods. Restrained demand, including external demand, continues to influence inflation. At the same time, the acceleration of inflation in the market segment of the service sector, which occurred in November, may be one of the signs of a recovery in consumer demand.
In November, inflation expectations of the population continued to decline, while remaining at an elevated level. Price expectations of enterprises as a whole have not changed. The slowdown in annual inflation creates conditions for reducing inflationary expectations of the population and business in the future.
According to the forecast of the Bank of Russia, taking into account the ongoing monetary policy, annual inflation will be 3.5-4.0% in 2020 and will remain close to 4% in the future. At the same time, annual inflation will be below 3% in the first quarter of 2020, when the effect of the VAT increase will be taken out of its calculation.
Monetary conditions. Since the previous meeting of the Board of Directors of the Bank of Russia, monetary conditions have continued to soften. OFZ yields and deposit and lending rates were declining. The decisions taken by the Bank of Russia to reduce the key rate and the decline in OFZ yields create conditions for a further reduction in deposit and lending rates, which will support the growth of corporate and mortgage lending. The Bank of Russia will evaluate the impact of decisions already made on the key rate on monetary conditions and inflation dynamics.
Economic activity. The GDP growth rate in 2019 may be closer to the upper limit of the Bank of Russia forecast range - 0.8–1.3%. This is primarily due to higher-than-expected annual GDP growth in the third quarter. However, the sustainability of such economic growth rates is still difficult to assess.
In the III-IV quarters there was some improvement in the dynamics of domestic demand. Thus, investment activity increased somewhat, including due to an increase in budget capital expenditures. In October, the annual growth rate of retail trade turnover increased. The annual growth of industrial production continued. However, leading indicators point to continued weak business sentiment in the industry, especially in terms of export orders. Economic activity continues to be constrained by a decline in external demand for Russian exports amid a slowdown in global economic growth.
The labor market does not create excessive inflationary pressure. Unemployment near historically low levels is due not to an expansion in the demand for labor, but to a simultaneous decline in the number of employed and able-bodied population.
In the second half of 2019, the budget policy began to support economic growth, which, among other things, is associated with the implementation of national projects planned by the Government. Going forward, an increase in government spending, including investment, will contribute to economic growth.
The forecast for GDP growth in 2020–2022 has been kept by the Bank of Russia unchanged. The GDP growth rate will gradually increase from 0.8–1.3% in 2019 to 2–3% in 2022. This is possible as the Government implements a set of measures to overcome structural constraints, including the implementation of national projects. At the same time, the lower growth rates of the global economy expected over the forecast horizon will continue to have a restraining effect on the growth of the Russian economy.
inflation risks. In the short term, disinflationary risks still prevail over proinflationary ones. This is primarily due to the state of domestic and foreign demand. Disinflationary risks from the dynamics of prices for certain food products remain, including due to an increase in the supply of agricultural products.
At the same time, it is necessary to take into account the effect of pro-inflationary factors. The risks of a reversal of trends in the food market are not excluded, given that the ratio of temporary and permanent factors in this market is difficult to assess. Along with this, the implemented easing of monetary policy may have a more significant upward impact on inflation than the Bank of Russia estimates. In the event of a more significant slowdown in global economic growth, including under the influence of tightening international trade restrictions and other geopolitical factors, volatility in global commodity and financial markets may increase, affecting exchange rate and inflation expectations. At the same time, pro-inflationary risks from the growth of budget spending in 2020 remain low due to the fact that the increase in spending is likely to be distributed over time.
Over a longer horizon, pro-inflationary risks from a number of domestic conditions remain. Raised and unanchored inflation expectations remain a significant risk. Fiscal policy parameters, including decisions to invest the liquid part of the National Wealth Fund above the threshold level of 7% of GDP, may also affect the medium-term dynamics of inflation.
The assessment by the Bank of Russia of the risks associated with the dynamics of wages and possible changes in consumer behavior has not changed significantly. These risks remain moderate.
If the situation develops in line with the baseline forecast, the Bank of Russia will assess the feasibility of a further reduction in the key rate at one of the next meetings of the Board of Directors. The Bank of Russia will make decisions on the key rate taking into account the actual and expected inflation dynamics relative to the target, economic development over the forecast horizon, as well as assessing the risks from internal and external conditions and the reaction of financial markets to them.
The next meeting of the Board of Directors of the Bank of Russia, which will consider the issue of the key rate level, is scheduled for February 07, 2020. Time of publication of the press release on the decision of the Board of Directors of the Bank of Russia - 13:30 Moscow time.
Dynamics of the refinancing rate of the Bank of Russia from 1992 to 2015. And further...
The material analyzes the dynamics of the refinancing rate over the past 20 years - starting from January 01, 1992. The highest refinancing rate, which was set by the Central Bank of the Russian Federation in the period from October 15, 1993 to April 28, 1994, was 210%. Over the course of 10 years, the rate of change in the refinancing rate of the Central Bank slowed down, that is, the refinancing rate became more stable. In the period from 1993 to 2000, the refinancing rate changed mainly during the year from 5 to 9 times. In the period from 2002 to 2007, the refinancing rate stabilized and changed during the year from 1 to 3 times, and only downward.
During 2008, the refinancing rate of the Central Bank of the Russian Federation was constantly growing, and especially often after the start of the global financial crisis. In 2008, the refinancing rate changed 6 times, despite the fact that almost all central banks of the world's leading countries revised rates downward. But despite the difficult financial period, Russia ended 2008 with a refinancing rate of 13.00%. (Instruction of the Central Bank of the Russian Federation of November 28, 2008 No. 2135-U "On the size of the refinancing rate of the Bank of Russia") and an inflation rate of 13.3%, i.e. The Central Bank of the Russian Federation kept the situation under control.
The refinancing rate of the Central Bank of the Russian Federation during 2009 changed 10 times, and all downwards. Russia ended 2009 with a Central Bank refinancing rate of 8.75% and inflation of 8.8% (Rosstat data), and these were the lowest figures since 1991, that is, in the entire history of post-Soviet Russia. Such a low refinancing rate set by the regulator was aimed at stimulating the lending activity of banks, as well as at curbing inflationary processes.
In 2010, the refinancing rate of the Central Bank changed only 4 times, and only downwards. In 2010, the lowest refinancing rate in the entire existence of the Russian Federation was also recorded at 7.75%, which was valid from June 01, 2010 to February 27, 2011. Russia ended 2010 with a Central Bank refinancing rate of 7.75% and inflation of 8.8%.
Russia ended 2011 with a refinancing rate of 8.00%. This was the fourth value of the refinancing rate of the Bank of Russia for the year. During the year, the rate was reviewed three times. Inflation in Russia in 2011 amounted to 6.1%, which is a historical minimum for the country.
2012 ended with a refinancing rate of 8.25% and inflation of 6.6%. During 2012, the Bank of Russia changed the refinancing rate only once - from September 14 upwards by 0.25 points. During the previous eight months of 2012 the refinancing rate was 8.00%.
2013 in Russia ended with a refinancing rate of 8.25%, a key rate of 5.5%, and inflation of 6.5%. Throughout 2013, the refinancing rate of the Bank of Russia remained unchanged at 8.25%. And from September 13 this year, the refinancing rate began to play a secondary role and the Bank of Russia is given for reference. According to the Bank of Russia project, by 2016 the refinancing rate will have to be equal in value to the key rate.
2014 ended with a refinancing rate of 8.25%, a key rate of 17% and inflation of 11.4%. During 2014, the policy of the Central Bank of the Russian Federation to adjust it to the level of the key rate was to continue. In fact, from January to December 2014, the refinancing rate did not change, and due to the sharp rise in the key rate at the end of the year, its change still looks unrealistic.
Throughout 2015, the refinancing rate did not change and the year ended with a refinancing rate of 8.25% and a key rate of 11.0%.
At the beginning of 2016, the refinancing rate was 11.00%, as was the key rate, and subsequently the change in the refinancing rate occurred simultaneously with the change in the key rate of the Bank of Russia and by the same amount. From January 1, 2016, the independent value of the refinancing rate is not set and the dynamics is not fixed. The key rate during 2016 changed twice (up to 10.5% and up to 10.0%). At the end of 2016, the key rate was kept at 10.00%.
The key rate / Refinancing rate for 2017 changed 6 times and all downward - from 10.11% to 7.75% (At the beginning of the year it was 10.0%, from March 27, 2017 it decreased to a level of 9.75% , from 05/02/2017 decreased to the level of 9.25%, from 06/19/2017 - 9.00%, from 09/18/2017 to 8.50%, from 10/30/2017 to 8.25%, and from 18.12. 2017 to 7.75%).
At the beginning of 2018, the Bank of Russia kept the key rate at 7.75% per annum, from February 12, 2018 it was reduced to 7.50%, from March 26, 2018 it was reduced to 7.25%, and from September 17, 2018 it was increased to 7. 50% due to changes in external conditions. On December 17, 2018, the last rate change of that year was made to 7.75%, this is the 5th key rate / refinancing rate / established during 2018.
In the period January - June 2019, the key rate of the Bank of Russia was 7.75% per annum, from June 17, 2019 it was reduced to - 7.50%, from July 29, 2019 it was reduced to 7.25%, from September 09 it was reduced to 7, 00%, from October 28, 2019 - 6.50%, and from December 16, 2019 it has already been reduced to 6.25%. This is the sixth rate cut in a year.
Below are all the refinancing rates of the Central Bank of the Russian Federation, starting from 1992 and up to the day of the abolition of its independent official establishment, and key rates for subsequent years.
| Validity period of the refinancing rate | Refinancing rate (%) | Regulatory document |
|---|---|---|
| 01/01/2016* | From this date, the value of the refinancing rate corresponds to the value of the key rate of the Bank of Russia - on the corresponding setting date | Bank of Russia Ordinance No. 3894-U, dated December 11, 2015, “On the refinancing rate of the Bank of Russia and the key rate of the Bank of Russia” |
| September 14, 2012 - December 31, 2015 | 8,25 | Bank of Russia Directive No. 2873-U dated September 13, 2012 |
| December 26, 2011 - September 13, 2012 | 8,00 | Bank of Russia Directive No. 2758-U dated December 23, 2011 |
| May 3, 2011 - December 25, 2011 | 8,25 | Bank of Russia Directive No. 2618-U dated April 29, 2011 |
| February 28, 2011 - May 2, 2011 | 8,00 | Bank of Russia Directive No. 2583-U dated February 25, 2011 |
| June 01, 2010 - February 27, 2011 | 7,75 | Bank of Russia Directive No. 2450-U dated May 31, 2010 |
| April 30, 2010 - May 31, 2010 | 8,00 | Bank of Russia Directive No. 2439-U dated April 29, 2010 |
| March 29, 2010 - April 29, 2010 | 8,25 | Bank of Russia Directive No. 2415-U dated March 26, 2010 |
| February 24, 2010 - March 28, 2010 | 8,50 | Bank of Russia Directive No. 2399-U dated February 19, 2010 |
| December 28, 2009 - February 23, 2010 | 8,75 | Bank of Russia Directive No. 2369-U dated December 25, 2009 |
| November 25 - December 27, 2009 | 9,0 | Bank of Russia Directive No. 2336-U dated November 24, 2009 |
| October 30, 2009 - November 24, 2009 | 9,50 | Bank of Russia Directive No. 2313-U dated October 29, 2009 |
| September 30, 2009 – October 29, 2009 | 10,00 | Instruction of the Bank of Russia dated September 29, 2009 No. 2299-U |
| September 15, 2009 – September 29, 2009 | 10,50 | Instruction of the Bank of Russia dated September 14, 2009 No. 2287-U |
| August 10, 2009–September 14, 2009 | 10,75 | Instruction of the Central Bank of the Russian Federation dated 07.08.2009 No. 2270-U |
| July 13, 2009 - August 9, 2009 | 11,0 | Instruction of the Central Bank of the Russian Federation dated July 10, 2009 No. 2259-U |
| June 5, 2009 - July 12, 2009 | 11,5 | Directive of the Central Bank of the Russian Federation dated 04.06.2009 No. 2247-U |
| May 14, 2009 - June 4, 2009 | 12,0 | Instruction of the Central Bank of the Russian Federation dated May 13, 2009 No. 2230-U |
| April 24, 2009 - May 13, 2009 | 12,5 | Instruction of the Central Bank of the Russian Federation dated April 23, 2009 No. 2222-U |
| December 1, 2008 - April 23, 2009 | 13,00 | Instruction of the Central Bank of the Russian Federation dated November 28, 2008 No. 2135-U |
| November 12, 2008 - November 30, 2008 | 12,00 | Instruction of the Central Bank of the Russian Federation dated November 11, 2008 No. 2123-U |
| July 14, 2008 - November 11, 2008 | 11,00 | Instruction of the Central Bank of the Russian Federation dated July 11, 2008 No. 2037-U |
| June 10, 2008 - July 13, 2008 | 10,75 | Instruction of the Central Bank of the Russian Federation dated 09.06.2008 No. 2022-U |
| April 29, 2008 - June 9, 2008 | 10,5 | Instruction of the Central Bank of the Russian Federation dated April 28, 2008 No. 1997-U |
| February 04, 2008 - April 28, 2008 | 10,25 | Instruction of the Central Bank of the Russian Federation dated February 1, 2008 No. 1975-U |
| June 19, 2007 - February 3, 2008 | 10,0 | Telegram of the Central Bank of the Russian Federation of June 18, 2007 No. 1839-U |
| January 29, 2007 - June 18, 2007 | 10,5 | Telegram of the Central Bank of the Russian Federation dated January 26, 2007 No. 1788-U |
| October 23, 2006 - January 22, 2007 | 11 | Telegram of the Central Bank of the Russian Federation of October 20, 2006 No. 1734-U |
| June 26, 2006 - October 22, 2006 | 11,5 | Telegram of the Central Bank of the Russian Federation of June 23, 2006 No. 1696-U |
| December 26, 2005 - June 25, 2006 | 12 | Telegram of the Central Bank of the Russian Federation of December 23, 2005 No. 1643-U |
| June 15, 2004 - December 25, 2005 | 13 | Telegram of the Central Bank of the Russian Federation of June 11, 2004 No. 1443-U |
| January 15, 2004 - June 14, 2004 | 14 | Telegram of the Central Bank of the Russian Federation dated January 14, 2004 No. 1372-U |
| June 21, 2003 - January 14, 2004 | 16 | Telegram of the Central Bank of the Russian Federation of June 20, 2003 No. 1296-U |
| February 17, 2003 - June 20, 2003 | 18 | Telegram of the Central Bank of the Russian Federation of February 14, 2003 No. 1250-U |
| August 7, 2002 - February 16, 2003 | 21 | Telegram of the Central Bank of the Russian Federation dated 08/06/2002 No. 1185-U |
| April 9, 2002 - August 6, 2002 | 23 | Telegram of the Central Bank of the Russian Federation dated April 8, 2002 No. 1133-U |
| November 4, 2000 - April 8, 2002 | 25 | Telegram of the Central Bank of the Russian Federation dated November 3, 2000 No. 855-U |
| July 10, 2000 - November 3, 2000 | 28 | Telegram of the Central Bank of the Russian Federation dated July 7, 2000 No. 818-U |
| March 21, 2000 - July 9, 2000 | 33 | Telegram of the Central Bank of the Russian Federation of March 20, 2000 No. 757-U |
| March 7, 2000 - March 20, 2000 | 38 | Telegram of the Central Bank of the Russian Federation of March 6, 2000 No. 753-U |
| January 24, 2000 - March 6, 2000 | 45 | Telegram of the Central Bank of the Russian Federation dated January 21, 2000 No. 734-U |
| June 10, 1999 - January 23, 2000 | 55 | Telegram of the Central Bank of the Russian Federation dated 09.06.99 No. 574-U |
| July 24, 1998 – June 9, 1999 | 60 | Telegram of the Central Bank of the Russian Federation dated July 24, 1998 No. 298-U |
| June 29, 1998 - July 23, 1998 | 80 | Telegram of the Central Bank of the Russian Federation of June 26, 1998 No. 268-U |
| June 5, 1998 - June 28, 1998 | 60 | Telegram of the Central Bank of the Russian Federation dated 04.06.98 No. 252-U |
| May 27, 1998 – June 4, 1998 | 150 | Telegram of the Central Bank of the Russian Federation of May 27, 1998 No. 241-U |
| May 19, 1998 – May 26, 1998 | 50 | Telegram of the Central Bank of the Russian Federation of May 18, 1998 No. 234-U |
| March 16, 1998 - May 18, 1998 | 30 | Telegram of the Central Bank of the Russian Federation of March 13, 1998 No. 185-U |
| March 2, 1998 – March 15, 1998 | 36 | Telegram of the Central Bank of the Russian Federation of February 27, 1998 No. 181-U |
| February 17, 1998 – March 1, 1998 | 39 | Telegram of the Central Bank of the Russian Federation dated February 16, 1998 No. 170-U |
| February 2, 1998 – February 16, 1998 | 42 | Telegram of the Central Bank of the Russian Federation dated 30.01.98 No. 154-U |
| November 11, 1997 - February 1, 1998 | 28 | Telegram of the Central Bank of the Russian Federation of November 10, 1997 No. 13-U |
| October 6, 1997 - November 10, 1997 | 21 | Telegram of the Central Bank of the Russian Federation dated 01.10.97 No. 83-97 |
| June 16, 1997 - October 5, 1997 | 24 | Telegram of the Central Bank of the Russian Federation dated 13.06.97 No. 55-97 |
| April 28, 1997 - June 15, 1997 | 36 | Telegram of the Central Bank of the Russian Federation dated April 24, 1997 No. 38-97 |
| February 10, 1997 - April 27, 1997 | 42 | Telegram of the Central Bank of the Russian Federation dated February 7, 1997 No. 9-97 |
| December 2, 1996 – February 9, 1997 | 48 | Telegram of the Central Bank of the Russian Federation of November 29, 1996 No. 142-96 |
| October 21, 1996 - December 1, 1996 | 60 | Telegram of the Central Bank of the Russian Federation of October 18, 1996 No. 129-96 |
| August 19, 1996 - October 20, 1996 | 80 | Telegram of the Central Bank of the Russian Federation dated 16.08.96 No. 109-96 |
| July 24, 1996 - August 18, 1996 | 110 | Telegram of the Central Bank of the Russian Federation of July 23, 1996 No. 107-96 |
| February 10, 1996 - July 23, 1996 | 120 | Telegram of the Central Bank of the Russian Federation dated February 9, 1996 No. 18-96 |
| December 1, 1995 – February 9, 1996 | 160 | Telegram of the Central Bank of the Russian Federation of November 29, 1995 No. 131-95 |
| October 24, 1995 - November 30, 1995 | 170 | Telegram of the Central Bank of the Russian Federation of October 23, 1995 No. 111-95 |
| June 19, 1995 - October 23, 1995 | 180 | Telegram of the Central Bank of the Russian Federation dated 16.06.95 No. 75-95 |
| May 16, 1995 - June 18, 1995 | 195 | Telegram of the Central Bank of the Russian Federation of May 15, 1995 No. 64-95 |
| January 6, 1995 - May 15, 1995 | 200 | Telegram of the Central Bank of the Russian Federation dated 05.01.95 No. 3-95 |
| November 17, 1994 – January 5, 1995 | 180 | Telegram of the Central Bank of the Russian Federation of November 16, 1994 No. 199-94 |
| October 12, 1994 - November 16, 1994 | 170 | Telegram of the Central Bank of the Russian Federation of October 11, 1994 No. 192-94 |
| August 23, 1994 - October 11, 1994 | 130 | Telegram of the Central Bank of the Russian Federation dated 22.08.94 No. 165-94 |
| August 1, 1994 – August 22, 1994 | 150 | Telegram of the Central Bank of the Russian Federation of July 29, 1994 No. 156-94 |
| June 30, 1994 - July 31, 1994 | 155 | Telegram of the Central Bank of the Russian Federation of June 29, 1994 No. 144-94 |
| June 22, 1994 - June 29, 1994 | 170 | Telegram of the Central Bank of the Russian Federation dated June 21, 1994 No. 137-94 |
| June 2, 1994 – June 21, 1994 | 185 | Telegram of the Central Bank of the Russian Federation dated 01.06.94 No. 128-94 |
| May 17, 1994 – June 1, 1994 | 200 | Telegram of the Central Bank of the Russian Federation of May 16, 1994 No. 121-94 |
| April 29, 1994 – May 16, 1994 | 205 | Telegram of the Central Bank of the Russian Federation of April 28, 1994 No. 115-94 |
| October 15, 1993 - April 28, 1994 | 210 | Telegram of the Central Bank of the Russian Federation of October 14, 1993 No. 213-93 |
| September 23, 1993 - October 14, 1993 | 180 | Telegram of the Central Bank of the Russian Federation of September 22, 1993 No. 200-93 |
| July 15, 1993 - September 22, 1993 | 170 | Telegram of the Central Bank of the Russian Federation of July 14, 1993 No. 123-93 |
| June 29, 1993 - July 14, 1993 | 140 | Telegram of the Central Bank of the Russian Federation of June 28, 1993 No. 111-93 |
| June 22, 1993 - June 28, 1993 | 120 | Telegram of the Central Bank of the Russian Federation of June 21, 1993 No. 106-93 |
| June 2, 1993 – June 21, 1993 | 110 | Telegram of the Central Bank of the Russian Federation dated 01.06.93 No. 91-93 |
| March 30, 1993 - June 1, 1993 | 100 | Telegram of the Central Bank of the Russian Federation of March 29, 1993 No. 52-93 |
| May 23, 1992 – March 29, 1993 | 80 | Telegram of the Central Bank of the Russian Federation of May 22, 1992 No. 01-156 |
| April 10, 1992 - May 22, 1992 | 50 | Telegram of the Central Bank of the Russian Federation dated 10.04.92 No. 84-92 |
| January 1, 1992 - April 9, 1992 | 20 | Telegram of the Central Bank of the Russian Federation of December 29, 1991 No. 216-91 |
* The value of the refinancing rate of the Bank of Russia from 01/01/2016 is equated to the value of the key rate of the Bank of Russia on the corresponding date. From 01.01.2016, the independent value of the refinancing rate is not set.
Dynamics of the Key Rate of the Bank of Russia for the period 2017 - 2020 looks like this:
| Validity period of the key rate | Key rate (refinancing rate*) -% |
|---|---|
| from December 16, 2019 - February 07, 2020 (tentative date) | 6,25 |
| from October 28, 2019 - December 15, 2019 | 6,50 |
| from September 09, 2019 - October 27, 2019 | 7,00 |
| from July 29, 2019 - to September 08, 2019 | 7,25 |
| from June 17, 2019 - to July 28, 2019 | 7,50 |
| from December 17, 2018 - to June 16, 2019 | 7,75 |
| from September 17, 2018 - to December 16, 2018 | 7,50 |
| from March 26, 2018 - to September 16. | 7,25 |
| from February 12, 2018 - to March 25, 2018. | 7,50 |
| from December 18, 2017 - to February 11, 2018. | 7,75 |
| from October 30, 2017 - to December 17, 2017. | 8,25 |
| from September 18, 2017 - to October 29, 2017. | 8,50 |
| from June 19, 2017 - to September 17, 2017. | 9,00 |
| from May 02, 2017 - to June 18, 2017. | 9,25 |
| from March 27, 2016 - to May 01, 2017. | 9,75 |
The dynamics of the key rate since its introduction (since September 13, 2013) and the history of its introduction can be viewed
The key rate / Refinancing rate / for today (from December 16, 2019) is - 6.25%.
Decisions taken by the Bank of Russia on the refinancing rate
On September 13, 2013, the Board of Directors of the Bank of Russia adopted a decision to improve the system of monetary policy instruments. Based on this decision, the key rate began to play the main role in the bank's policy, while the refinancing rate plays a secondary role and is given for reference. In addition, the Board of Directors of the Central Bank decided that in the period from September 13, 2013 to January 1, 2016, the refinancing rate will be adjusted to the level of the key rate.
Since 01/01/2016, the refinancing rate on the website of the Central Russia of the Russian Federation is no longer even given for reference, since it now corresponds to the key rate.
The decision to adjust the refinancing rate was made on December 11, 2015 the Bank of Russia jointly with the Government, which provides for the following:
- From January 1, 2016, by decision of the Board of Directors of the Bank of Russia dated December 11, 2015, the value of the refinancing rate is equal to the value of the key rate of the Bank of Russia, determined on the relevant date, and then its independent value is not set. In the future, the change in the refinancing rate will occur simultaneously with a change in the key rate of the Bank of Russia by the same amount.
- From January 1, 2016, the Government of the Russian Federation will also use the key rate of the Bank of Russia in all regulations instead of the refinancing rate (the order was signed by the Prime Minister of Russia D. Medvedev).
What is the key rate of the Central Bank of the Russian Federation for today in 2018? What is the “key rate” of the Central Bank of the Russian Federation? Where can I see a summary table of the values of the key rate of the Bank of Russia? How does the key rate cut affect loans and deposits? What do businessmen and accountants need to know about the key rate? We will answer the main questions and present a single table with rates.
The value of the key rate today
The key rate is the interest rate on the main operations of the Bank of Russia to regulate the liquidity of the banking sector. This indicator is considered an indicator of monetary policy. Such a concept as the "key rate" was introduced by the Bank of Russia on September 13, 2013. And from January 1, 2016, the Bank of Russia equated the refinancing rate to the value of the key rate (instruction of the Bank of Russia dated December 11, 2015 No. 3894-U). The key rate of the Central Bank of the Russian Federation for today is shown in the table (by year):
| Key rate sizes | ||
| The period from which the rate is set | Key rate (%, per annum) | Base |
| 30.04.2018 | 7,25 | Bank of Russia information 04/27/2018 |
| 26.03.2018 | 7,25 | Information of the Bank of Russia 23.03.2018 |
| 09.02.2017 | 7,5 | Information from the Bank of Russia dated February 9, 2018 |
| 18.12.2017 | 7,75 | Information from the Bank of Russia dated December 15, 2017 |
| October 30, 2017 | 8,25 | Information from the Bank of Russia dated October 17, 2017 |
| September 18, 2017 | 8.5 | Information from the Bank of Russia dated September 15, 2017 |
| since June 19, 2017 | 9 | Information from the Bank of Russia dated June 16, 2017 |
| since May 2, 2017 | 9.25 | Information from the Bank of Russia dated April 28, 2017 |
| since March 27, 2017 | 9.75 | Information from the Bank of Russia dated March 24, 2017 |
| since September 19, 2016 | 10 | Information from the Bank of Russia dated September 16, 2016 |
| since June 14, 2016 | 10.5 | Information from the Bank of Russia dated 06/10/2016 |
| since August 3, 2015 | 11 | Information from the Bank of Russia dated July 31, 2015 |
| since June 16, 2015 | 11.5 | Information of the Bank of Russia dated 06/15/2015 |
| since May 5, 2015 | 12.5 | Information from the Bank of Russia dated April 30, 2015 |
| since March 16, 2015 | 14 | Information from the Bank of Russia dated March 13, 2015 |
| since February 2, 2015 | 15 | Information from the Bank of Russia dated January 30, 2015 |
| since December 16, 2014 | 17 | Information from the Bank of Russia dated 12/16/2014 |
| since December 12, 2014 | 10.5 | Information from the Bank of Russia dated 11.12.2014 |
| since November 5, 2014 | 9.5 | Information of the Bank of Russia |
| since July 28, 2014 | 8 | Information of the Bank of Russia dated 25.07.2014 |
| since April 28, 2014 | 7.5 | Information from the Bank of Russia dated April 25, 2014 |
| since March 3, 2014 | 7 | Information of the Bank of Russia dated 03.03.2014 |
| since September 13, 2013 | 5.5 | Information from the Bank of Russia dated 09/13/2013 |
Also on the website of the Central Bank of the Russian Federation you can always find the official key interest rate for today. Information is displayed on the main page of the Central Bank:
Many people quite often meet various news about a key bet on television, radio or on the Internet. So, for example, lately there is more and more news about the reduction of the key rate of the Central Bank of the Russian Federation? But how to deal with this? Is it good or bad? Many do not think about it and believe that the dynamics of reducing the key rate does not affect their lives in any way. But is it really so?
If raising or lowering the key rate is not so important for ordinary people, then why is the news about the next meeting of the Central Bank of the Russian Federation on the issue of changing the key rate occupying the top lines? We will talk about this further and give examples of the impact of the size of the key rate not only on ordinary citizens, but also on business.
How the Central Bank of the Russian Federation changes the value of the key rate
The only regulator, the Bank of Russia (CBRF), is entitled to raise or lower the key rate. For this purpose, special meetings are held at which the commission decides on the possibility of adjusting the current key rate. Based on the results of such meetings, the Central Bank of the Russian Federation issues press releases on the decisions taken, which are published on the website of the Central Bank. The key rate is reduced or increased by "basis points". Therefore, in official data, the abbreviation "bp" is usually used.
In official press releases, as a rule, the prerequisites for making a decision on the key refinancing rate are described in some detail. So, for example, in a press release dated September 15, 2017, the Central Bank of the Russian Federation announced a reduction in the key rate by 0.5 percentage points to 8.5%. It is explained that the following factors were taken into account in making this decision:
- inflation dynamics;
- monetary conditions;
- economic activity;
- inflation risks.
On October 27, 2017, the Central Bank continued to cut the key rate and lowered it to 8.25 percent. The Central Bank noted the continued growth of the economy and increased inflationary expectations. The Central Bank intends to continue moving from moderately tight to neutral monetary policy.
Why do bankers analyze these indicators? How, for example, is economic activity and inflation in a country related to the size of the key rate? This will be discussed further.
The calendar of meetings of the Central Bank of the Russian Federation at the key rate n can be found on the website of the Bank of Russia. It is posted at this link. So, for example, the next meeting on the rate is expected on October 27, 2017.
Key rate: loans and deposits
The key interest rate is the rate at which the Central Bank can lend to commercial banks. Also, at the key rate, the Central Bank is ready to accept money from banks for deposits. Let's explain these questions in more detail.
Recently, the key rate has been gradually reduced. So, for example, if on September 19, 2016 its size was 10 percent per annum, then a year later (as of September 18, 2017) the key rate decreased to 8.5 percent (see the table above).
Along with the key rate, commercial banks are lowering interest rates on loans. For example, from June 1, 2017, Sberbank lowered interest rates on housing loans for the purchase of new buildings, and from June 5, on other basic mortgage products. The decrease was 0.20-0.75 percentage points. At the same time, it is noted that Sberbank is seeing a stable recovery in demand for mortgages: since the beginning of 2017, the volume of applications has been growing compared to the same period in 2016.
Here are other examples. The Bank of Russia decided to reduce the key rate by 50 basis points from September 18, 2017 to 8.50% per annum. In such circumstances, approximate mortgage rates for new buildings start at 9 percent per annum.
The key rate is not the only factor influencing demand in the mortgage sector. Lowering the rate creates conditions for the formation of more interesting products in the lending market as a whole. However, a powerful driver in the formation of demand for mortgages in general is the general state of the economy, people's confidence in the future.
Contributions
Reducing the key rate leads to a reduction in deposit rates. And this wave is justified, since it simply becomes unprofitable for banks to attract deposits from individuals and businesses at a higher percentage.
The point is that when a person or organization opens a deposit in a bank, he, in fact, lends money to the bank for a certain period. For this, the bank pays him income in the form of annual interest. Why would a bank pay more on a deposit than the key rate, if a commercial bank can borrow money from the Central Bank at the key rate? And in fairly large quantities. Realizing this, banks accept deposits from the public or businesses at a lower percentage than the official key rate.
It would be strange if banks borrowed money from the population at rates exceeding the key one. After all, if deposit rates exceed the value of the key rate, then banks will work for themselves "in the red." So, for example, with the official value of the key rate at 8.5 percent, even the most “profitable” deposits are offered by banks at lower interest rates.
If you are offered to open deposits at rates that exceed the key, then be especially careful. This should at least alert a potential investor.
The decrease in the key rate leads to a decrease in deposit rates, which, in turn, forces the population and businesses to look for an alternative to bank deposits (deposits).
The key rate determines the price of money for commercial banks, and they, in turn, provide loans to companies and individuals. If the Central Bank of the Russian Federation raises the key rate, then money becomes more expensive, and this, along the chain, leads to the fact that commercial banks also increase their rates on loans and deposits for the population and enterprises.
And vice versa: if the Central Bank of the Russian Federation raises the key rate, then it becomes more expensive for banks to borrow money from the Central Bank of the Russian Federation. And banks are raising interest rates on deposits. Thus, banks attract money from the population and businesses on more favorable terms for themselves and for investors. So, for example, when during the crisis the key rate jumped to 17% per annum, banks also began to raise deposit rates. Then you could come across the following news:
However, when the key rate began to decline, then the rates on deposits crept down.
Key rate and inflation: relationship
The Bank of Russia uses the key rate to influence inflation. The plans of the Central Bank of Russia include a small inflation - at the level of 4% per year. Economists of the regulator analyze the data and make a calculation: what should be the key rate at the moment in order for inflation to decrease and the economy to work.
If interest rates on loans and deposits rise, citizens and firms want to take out fewer loans – which means spending less and investing less – and everyone wants to save more. As a result, the demand for goods and services decreases, and, accordingly, inflation decreases.
And vice versa: if the Bank of Russia lowers the key rate, money becomes cheaper, interest rates on loans and deposits for households and firms decrease, everyone takes more loans, spends more, invests more, saves less. This leads to increased demand and accelerated inflation.
Does the dollar exchange rate affect the key rate? Certainly! The country's economy depends on the dollar exchange rate. The state of the economy is associated with consumer lending. And lending is linked to the key rate. Further in the table, you can trace the dynamics of growth and decline in inflation in conjunction with changes in the key refinancing rate in 2015-2017:
How the key rate affects the business
A change in the key rate entails not only a change in the terms of lending and investment. There are a number of business issues that are related to the value of the key rate. Let's talk about them. At the same time, in our calculations, we will take into account the key rate that has been in effect since September 18, 2017 – 8.5 percent. Therefore, keep in mind that you may need to use a different key rate indicator in your calculations.
Compensation for late payment of wages
If the employer has not paid wages to employees on time (vacation or dismissal), then workers are entitled to compensation for the delay. This is provided for by Article 236 of the Labor Code of the Russian Federation. The amount of compensation for delayed wages is determined in the collective or labor agreement. If the amount of compensation is not established by the labor or collective agreement, then it is calculated on the basis of 1/150 of the key rate for each day of delay. Compensation for salary delay is calculated according to the formula:
Suppose that the amount of salary arrears amounted to 590,000 rubles. The delay period is 32 days. During the delay, the key rate was 8.50%. To calculate compensation, wage arrears must be multiplied by 1/150 of the key rate and by the number of days of delay. Accordingly, compensation for each day will be 10,698.67 rubles. (590,000 rubles × 8.50% / 150 × 32).
Interest on taxes and insurance premiums
The amount of penalties that must be paid in case of late transfer of taxes or insurance contributions to the budget depends on the size of the key rate. By the way, from October 1, the procedure for calculating tax penalties (for late payment of taxes and contributions transferred to the IFTS) is changing. So, for debts that arose from 10/01/2017, their rate depends on the number of days of delay:
- for delays up to 30 calendar days inclusive, penalties are calculated based on 1/300 of the Central Bank refinancing rate, which is equal to the key rate;
- in case of delay over 30 calendar days: for the first 30 days based on 1/300 of the rate, and for subsequent days - based on 1/150 of the rate.
Late refund of taxes and contributions
If the IFTS returned the overpayment of taxes or insurance premiums with a delay, then the tax authorities are obliged to pay interest to the company or individual entrepreneur at the key rate (Article 78 of the Tax Code of the Russian Federation). As a general rule, they must transfer money to the current account within a month after they received an application for the return of the overpayment (clause 6, article 78 of the Tax Code of the Russian Federation). But the tax authorities may not meet this deadline. Then you need to calculate the interest, taking into account the key rate according to the formula:
Example. The organization filed an application for a refund of an overpayment of tax in the amount of 276,000 rubles. However, the tax authorities returned the overpayment with a delay of 22 days. The accountant submitted to the IFTS an application for the payment of interest for the delay in tax returns. The amount of interest was 1414 rubles. (276,000 × 8.5% / 365 days × 22 days).
Many paragraphs of legislative norms are based on what key rate of the Central Bank of the Russian Federation is in force today. In particular, this applies to penalties on tax issues, compensations to citizens of the Russian Federation, etc. The influence of the considered parameter on the banking sector is also important. And here there is not only a causal relationship between it and products, for example, interest on deposits and loans, but also a direct definition of certain service conditions. In particular, penalties for violation of the payment schedule for mortgage loans. Considering that the key rate of the Central Bank of the Russian Federation changes and its earlier levels are also used in the calculations, below will be given not only its size for today - 2019, but also for earlier periods in the form of a table. This will allow you to determine the parameter for the required period, as well as evaluate the dynamics.
Table - the key rate of the Central Bank of the Russian Federation for today (2019) and all its changes since then
The key rate of the Central Bank of the Russian Federation for today(2019) installed at 6.25%. At the last meeting on December 13, 2019, it was lowered by 0.25%.
The directly considered parameter in the Russian Federation was introduced only five years ago - on September 13, 2013. From January 1, 2016, it was equalized to the refinancing rate. Thus, the key rate of the Central Bank of the Russian Federation became, in fact, the only regulatory parameter used to calculate monetary relationships in the legislation.
| Date of the meeting of the Board of Directors of the Central Bank of the Russian Federation |
Decision |
Set value (% per annum) | Effective date of the new key rate level |
|---|---|---|---|
| 12/13/2019 | Downgrade |
6.25 (current level) | December 16, 2019 |
| 10/25/2019 | Downgrade |
6,50 | October 28, 2019 |
| 09/06/2019 | Downgrade |
7,00 | 09/09/2019 |
| July 26, 2019 | Downgrade |
7,25 | 07/29/2019 |
| 06/14/2019 | Downgrade |
7,50 | 06/17/2019 |
| December 14, 2018 | Increase |
7,75 | 12/17/2018 |
| 09/14/2018 | Increase |
7,50 | 09/17/2018 |
| 03/23/2018 |
Downgrade |
7,25 | 03/26/2018 |
| 02/09/2018 |
Downgrade |
7,50 |
02/12/2018 |
| 12/15/2017 |
Downgrade |
7,75 |
December 18, 2017 |
| 10/27/2017 |
Downgrade |
8,25 |
October 30, 2017 |
| 09/15/2017 |
Downgrade |
8,50 |
09/18/2017 |
| 06/16/2017 |
Downgrade |
9,00 |
06/19/2017 |
| 04/28/2017 |
Downgrade |
9,25 |
05/02/2017 |
| 03/24/2017 |
Downgrade |
9,75 |
03/27/2017 |
| 09/16/2016 |
Downgrade |
10,00 |
09/19/2016 |
| 06/10/2016 |
Downgrade |
10,50 |
06/14/2016 |
| July 31, 2015 | Downgrade | 11,00 | 08/03/2015 |
| 06/15/2015 | Downgrade | 11,50 | 06/16/2015 |
| 04/30/2015 | Downgrade | 12,50 | 05/05/2015 |
| 03/13/2015 | Downgrade | 14,00 | 03/16/2015 |
| 01/30/2015 | Downgrade | 15,00 | 02.02.2015 |
| 12/16/2014 | Increase | 17,00 | 12/16/2014 |
| 12/11/2014 | Increase | 10,50 | 12/12/2014 |
| 11/05/2014 | Increase | 9,50 | 11/05/2014 |
| 07/25/2014 | Increase | 8,00 | July 28, 2014 |
| 04/25/2014 | Increase | 7,50 | 04/28/2014 |
| 03/03/2014 | Increase | 7,00 | 03/03/2014 |
| 09/13/2013 | Install | 5,50 | 09/13/2013 |
A sharp increase in the key rate of the Central Bank of the Russian Federation was observed at the end of 2014. It was a natural reaction to the micro- and macroeconomic situation in the Russian Federation. In particular, the introduction of sanctions, both against Russia and as a response. By means of the indicator under consideration, the regulator balances the monetary state of the state. It can be noted that such actions of the Central Bank brought a positive effect, which is reflected in the systematic reduction of the key rate since the beginning of 2015.
The downward trend of the considered parameter lasted for a long time. Up until September 2018. From that moment on, within just four months, there was an increase again. Twice. Both times by 0.25%. Accordingly, 2018 closed not only with a key rate of 7.75%, but also with its negative dynamics. Separately, we note that based on these parameters, it is impossible to predict the change in the rate for the entire 2019. As mentioned, this is a tool of the Central Bank of the Russian Federation to respond to various parameters of the country's micro- and macroeconomics.
Meeting of the Central Bank of the Russian Federation on the key rate - schedule for 2019
The schedule of the meeting of the Board of Directors of the Central Bank of the Russian Federation is approved in advance. That is, for 2019 it was compiled in the last quarter of 2018. Includes, of course, exclusively scheduled meetings. There are eight in total:
- 02/08/2019 (the rate is left at the same level);
- 03/22/2019 (the rate is left at the same level);
- April 26, 2019 (the rate is left at the same level);
- 06/14/2019 (rate reduced by 0.25%);
- July 26, 2019 (rate reduced by 0.25%);
- 09/06/2019 (rate reduced by 0.25%);
- October 25, 2019 (rate reduced by 0.50%);
- December 13, 2019 (rate reduced by 0.25%).
A couple of nuances can be noted here. First, the list includes only scheduled meetings of the Board of Directors of the Central Bank of the Russian Federation. At the same time, extraordinary events may occur. They are collected only in emergency cases, when there are global changes in the country's economy. If such situations occur, they will be included in the list immediately - at the time of publication of information about such a decision.
Secondly, meetings of the Board of Directors of the Central Bank of the Russian Federation are held exclusively on business days. That is, scheduled collections do not occur on Saturday, Sunday, or a public holiday. According to the specified schedule, everyone will be on Friday. Thirdly, given that the decision to change the key rate of the Central Bank of the Russian Federation can be made on Friday, the entry into force of the new level takes place on the next business day. Often Monday. Only after emergency meetings can a decision be made on its urgent entry into force.
Forecast on the key rate of the Central Bank of the Russian Federation
As mentioned earlier, the parameter under consideration is a tool for responding to micro- and macroeconomic indicators. That is, it is impossible to predict its final level for the whole year. The maximum period for which it is possible at least approximately, in fact with a 50 to 50 share, to predict a possible change in the key rate of the Central Bank of the Russian Federation is the next meeting of the Board of Directors.
The next meeting will take place next year (02/07/2020). Until then, a lot of changes are possible. At the same time, at the moment there are no significant factors that make it possible to predict a possible increase in the rate. As well as the prerequisites for its reduction. Moreover, at each of the last three meetings, the key rate was reduced by 0.25 and 0.50% (in general, for the last 3 meetings it was reduced by 1.0%). Therefore, most likely, it will be left at the same level. Although a shift up or down is possible, but most likely, with such a decision, which, again, is unlikely, the change will be no more than 0.25%.
What affects the key rate of the Central Bank of the Russian Federation
When determining the required level of the key rate, the Board of Directors of the Central Bank of the Russian Federation relies on a huge amount of information provided in various reports. All data can be divided into four main groups:
- Current dynamics of inflation;
- Monetary conditions of banks on debt obligations, deposit products, etc.;
- Activity in the economic direction of all persons of the country - individuals and enterprises;
- Forecast on inflationary risks.
Relying even on these four points, without giving a detailed description of them, it becomes clear that the key rate of the Central Bank of the Russian Federation reflects the overall economic situation of the country today, and also allows you to contain the negative factors that affect it.
THE BANK OF RUSSIA MADE A DECISION
REDUCING THE KEY RATE BY 50 B.P. TO 8.50%
On September 15, 2017, the Board of Directors of the Bank of Russia decided to reduce the key rate by 50 bp to 8.50% per annum. The Board of Directors notes that inflation is close to 4%, and the economy continues to grow. Against the backdrop of favorable price dynamics for a number of goods and services, inflationary expectations resumed their decline, but they have not yet consolidated at a low level. Medium-term risks of inflation exceeding the target prevail over the risks of sustained downward deviation of inflation. To keep inflation close to 4%, the Bank of Russia will continue to pursue a moderately tight monetary policy.
The Board of Directors of the Bank of Russia, when making a decision on the key rate, proceeded from the following.
Dynamics of inflation. Inflation is close to 4%. After rising to 4.4% in June, inflation stood at 3.3% in August. The decline in inflation in the market of non-food products continues, the growth in prices for services has stabilized at about 4%. Inflation remains highly homogeneous across the consumer basket and across regions. Growth in food prices is slowing down due to the seasonal reduction in the price of fruit and vegetables, which turned out to be stronger than preliminary estimates.
As low inflation develops, the contribution of volatile components, which, in particular, include prices for fruits and vegetables, to the overall change in the consumer price index becomes more noticeable. Market factors during 2018 will lead to the fact that inflation can be both above and below 4%. Expressed changes in prices for the goods and services most frequently purchased by the population are rather quickly reflected in the dynamics of inflationary expectations. To keep inflation close to 4%, it is necessary to reduce the sensitivity of inflation expectations to changes in the price environment.
Monetary conditions. Monetary conditions continue to support the public's propensity to save as economic activity picks up and current incomes recover. Rates on banking transactions in real terms remain in the positive area. At the same time, nominal interest rates on loans continue to decline under the influence of both the earlier decrease in the key rate and the decrease expected by market participants. Banks soften non-price terms of lending selectively, continuing to carefully select borrowers. The conservative approach of banks, along with a moderately tight monetary policy, contributes to the formation of the conditions necessary for inflation to consolidate around 4% and further reduce inflation expectations.
economic activity. The increase in GDP in the II quarter exceeded forecast estimates. Growth was supported by investment and consumer demand, as well as recovery of inventories. The increase in consumer demand in the current monetary conditions does not create significant inflationary risks with the expansion of the supply of goods and services. In the II quarter, the growth of manufacturing output continued, and an increase in construction work began. A significant contribution to the increase in the rate of economic growth was made by trade and mining. In some sectors, the acceleration of growth was associated with both stable and one-off factors, the influence of which is likely to decrease in the second half of the year, which is partly confirmed by the statistical data in July. Taking into account the positive dynamics of the second quarter, the forecast for GDP growth in 2017 was increased to 1.7 - 2.2%.
At the same time, the assessment by the Bank of Russia of the trajectory of economic development in the medium term remains the same. The economy is near the potential level. Economic growth may be constrained by a shortage of production capacity, as well as the situation on the labor market, where a shortage of qualified personnel in certain segments is possible. In the future, the GDP growth rate above 1.5 - 2% per year will be achievable, subject to structural reforms.
inflation risks. Medium-term risks of inflation exceeding 4% prevail over the risks of sustained deviation of inflation downwards from 4%.
In the next six months, fluctuations in food prices will continue to be a source of inflation volatility. The dynamics of food prices will depend on the quality and safety of the harvest. Short-term factors related to the food market may lead to a temporary deviation of inflation both up and down from 4%, but this will not be sustainable.
The main sources of medium-term inflation risks have not changed. Firstly, they are connected with possible price fluctuations in the world commodity and commodity markets. The implementation of the fiscal rule will help to reduce the risks associated with the dynamics of oil prices. Secondly, an increase in the structural shortage of labor resources can lead to a significant lag in the growth rate of labor productivity from the growth of wages. Third, a change in the behavior of households associated with a significant decrease in the propensity to save can become a source of inflationary pressure. Fourth, inflationary expectations remain highly sensitive to changes in prices for certain groups of goods and services and to exchange rate dynamics.
Given these factors, keeping inflation close to the target will require maintaining moderately tight monetary conditions.
On the horizon of the next two quarters, the Bank of Russia admits the possibility of reducing the key rate. When making a decision on the key rate, the Bank of Russia will proceed from an assessment of the risks of a significant and sustainable deviation of inflation from the target, as well as the dynamics of consumer prices and economic activity relative to the forecast.
The next meeting of the Board of Directors of the Bank of Russia, which will consider the issue of the key rate level, is scheduled for October 27, 2017. The time of publication of the press release on the decision of the Board of Directors of the Bank of Russia is 13:30 Moscow time.
