The Department of External and Public Relations of the Bank of Russia reports that on August 9, 2013, the Board of Directors of the Bank of Russia decided to leave unchanged the level of interest rates on Bank of Russia operations and the refinancing rate (“Interest rates on Bank of Russia operations”).
This decision was made based on an assessment of inflation risks and economic growth prospects.
In July and early August, the annual rate of increase in consumer prices continued to decline, but remained above the target range and was estimated at 6.5% as of August 5, 2013. This slowdown in inflation rates was primarily due to the dynamics of prices for food products. At the same time, there was a slight decrease in the growth rate of prices for non-food goods and services, with the exception of regulated prices and tariffs. Core inflation fell to 5.6% in July. According to Bank of Russia estimates, there is no pronounced pressure on prices from demand, which is due to the fact that total output is slightly below its potential level. According to Bank of Russia forecasts, given the current direction of monetary policy, as well as in the absence of negative shocks in the food market, inflation will return to the target range during the second half of 2013 and will maintain a downward trend in 2014. At the same time, to achieve the inflation target in the medium term, it is necessary to consolidate positive trends in the dynamics of inflation expectations.
The dynamics of the main macroeconomic indicators indicate continued low growth rates of the Russian economy. The annual growth rate of industrial production remains low, and the volume of investment in fixed capital continues to decline. Under these conditions, recent months have seen a slight increase in the unemployment rate. The main source of economic growth currently remains consumer activity, supported by growth in real wages and retail lending. Weak investment activity and the slow recovery of external demand indicate continued significant risks of a slowdown in the growth of the Russian economy, including in the medium term.
The Bank of Russia will continue to monitor inflation risks and the risks of a slowdown in economic dynamics. When making decisions, the Bank of Russia will focus on inflation targets and assessments of economic growth prospects.
The next meeting of the Board of Directors of the Bank of Russia, at which issues of monetary policy will be considered, is expected to be held on September 13, 2013.
Interest rates on Bank of Russia operations
(% per annum)
| Purpose | Tool type | Tool | Term | from 11.06.13 |
|---|---|---|---|---|
| Providing liquidity | Overnight loans | 1 day | 8,25 | |
| Currency swap transactions (ruble part) | 1 day | 6,50 | ||
| Lombard loans, repo | 1 day, 1 week | 6,50 | ||
| Pawn loans | 30 days | 6,50 | ||
| REPO | 12 months | 7,25 | ||
| Gold-backed loans | Up to 90 days | 6,50 | ||
| From 91 to 180 days | 7,00 | |||
| From 181 to 365 days | 7,25 | |||
| Loans secured by non-marketable assets or guarantees | Up to 90 days | 6,75 | ||
| From 91 to 180 days | 7,25 | |||
| From 181 to 365 days | 7,50 | |||
| Open market operations (minimum interest rates) | REPO auctions | 1 day | 5,50 | |
| Auctions for loans secured by non-marketable assets or guarantees | 12 months | 5,75 | ||
| Lombard auctions, repo auctions | 1 Week | 5,50 | ||
| 3 months | 6,50 | |||
| 6 months | 7,00 | |||
| 12 months | 7,25 | |||
| Liquidity absorption | Open market operations (maximum interest rates) | Deposit auctions | 1 Week | 5,00 |
| 1 month | 5,75 | |||
| 3 months | 6,50 | |||
| Standing operations (at fixed interest rates) | Deposit operations | 1 day, 1 week, 1 month, on demand | 4,50 | |
| For reference: | ||||
| Refinancing rate | 8,25 | |||
* Transactions have been suspended.
** The interest rate is set as of July 15, 2013.
Document overview
On August 9, 2013, the Board of Directors of the Central Bank of the Russian Federation decided not to change the refinancing rate and interest rates on Bank of Russia operations. Let us remind you that the discount rate since September 14, 2012 is 8.25% per annum.
The decision was made based on an assessment of inflation risks and economic growth prospects.
In July - early August, the annual growth rate of consumer prices continued to decline, but remained above the target range. As of August 5, 2013, it was 6.5%. Core inflation fell to 5.6% in July.
The Bank of Russia notes that with this trend (and in the absence of negative shocks in the food market), inflation will return to the target range during the second half of 2013 and will continue to decline in 2014.
At the same time, in order to achieve the inflation target in the medium term, it is necessary to consolidate positive trends in the dynamics of inflation expectations.
It is noted that low growth rates of the Russian economy have recently persisted. For example, the annual growth rate of industrial production remains low, and the volume of investment in fixed capital continues to decline. This is due to a slight increase in unemployment.
The Bank of Russia draws attention to the fact that weak investment activity and the slow recovery of external demand indicate continued significant risks of a slowdown in economic growth (including in the medium term).
The next meeting of the Board of Directors of the Central Bank of the Russian Federation, at which issues of monetary policy will be considered, is planned to be held on September 13, 2013.
Key rate of the Bank of Russia and all its changes
The key rate of the Central Bank of the Russian Federation for today is 7.25%, and from 09/09/2019 it will be 7.00%. The next Board of Directors of the Bank of Russia, held on September 6, 2019, decided to reduce the key rate by 25 bp, to 7.00% per annum. This key rate will be valid until October 25, 2019.
The Board of Directors noted that inflation continues to slow down. At the same time, inflation expectations remain at an elevated level. The growth rate of the Russian economy continues to be below the expectations of the Bank of Russia. The risks of a significant slowdown in the global economy have increased. Until the end of the year, the risks of acceleration and deceleration of inflation are balanced. Under these conditions and taking into account the actual dynamics of inflation, the Bank of Russia lowered the annual inflation forecast for 2019 from 4.2–4.7 to 4.0–4.5%. In the future, according to the forecast of the Bank of Russia, taking into account the current monetary policy, annual inflation will remain close to 4%.
If the situation develops in accordance with the baseline forecast, the Bank of Russia will assess the feasibility of further reducing 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 dynamics of inflation relative to the target, economic development over the forecast horizon, as well as assessing risks from internal and external conditions and the reaction of financial markets to them.
Bank of Russia key rate for September - October 2019
At the regular meeting of the Board of Directors of the Bank of Russia, held on September 6, 2019 it was decided to reduce the key rate by 25 bp to 7.00%. This key rate will be valid from 09.09.2019 to 25.10.2019, i.e. before the date of the next meeting of the Board of Directors of the Bank of Russia.
The previous key rate of the Bank of Russia was 7.25% and its validity period lasted just over one month (from July 29, 2019 to September 8, 2019).
When deciding to reduce the key rate to 7.00%, the Board of Directors of the Bank of Russia proceeded from the following:
Inflation dynamics. Inflation continues to slow down. The annual growth rate of consumer prices in August decreased to 4.3% (from 4.6% in July 2019). Annual core inflation at the end of August also decreased and amounted to 4.3% after 4.5% in July. Most inflation indicators, reflecting the most stable processes of price dynamics, according to Bank of Russia estimates, are close to 4%.The Bank of Russia's assessment of risks associated with the dynamics of wages and prices of certain food products and possible changes in consumer behavior has not changed significantly. These risks remain moderate.The dynamics of consumer demand have a restraining effect on inflation. Temporary disinflationary factors also contributed to the slowdown in consumer price growth, including a shift in seasonality in the dynamics of prices for fruits and vegetables against the backdrop of an earlier arrival of the new harvest. The slowdown in annual inflation also reflects the effect of a high base in the dynamics of prices for the main types of motor fuel.
In August, the population's inflation expectations decreased slightly, but remain at an elevated level. Price expectations of enterprises showed mixed dynamics in the context of the weakening of the ruble that occurred in August. The slowdown in annual inflation creates conditions for lower inflation expectations in the future.
Taking into account the actual dynamics of inflation, the Bank of Russia lowered the annual inflation forecast for 2019 from 4.2–4.7 to 4.0–4.5%. In the future, according to the forecast of the Bank of Russia, taking into account the current monetary policy, annual inflation will remain close to 4%.
Monetary conditions. Since the previous meeting of the Board of Directors of the Bank of Russia, monetary conditions have continued to soften. This was also facilitated by a change in the expectations of financial market participants regarding the trajectory of the Bank of Russia key rate, as well as a further downward revision of the expected trajectories of interest rates in the US and the eurozone. OFZ yields and interest rates continued to decline in most segments of the deposit and credit market. 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.
Lending to the real sector continues to grow amid easing monetary conditions. At the same time, since June, the annual growth rate of loans to individuals has been slowing down after a noticeable increase in 2018 - early 2019.
Economic activity. The growth rate of the Russian economy continues to be below the expectations of the Bank of Russia. This is due to a decrease in external demand for Russian export goods in the context of the ongoing slowdown in the global economy, as well as the weak dynamics of investment activity, including in terms of government investment expenditures. In July, the annual growth in industrial production continued, however, leading indicators for July-August indicate the possibility of a deterioration in the situation in industry. In conditions of stagnation of real disposable income of the population, the annual growth rate of retail trade turnover continues to decline. The labor market does not create excessive inflationary pressure. Unemployment at historically low levels is not due to an expansion in demand for labor, but to a simultaneous decline in the number of employed people and the working-age population.
In the first half of the year, fiscal policy had a restraining effect on the dynamics of economic activity. This is partly due to the slower than expected implementation of national projects planned by the Government. Increased government spending, including investment spending, in the second half of 2019 will support economic growth.
Taking into account the weak economic activity observed since the beginning of this year, the Bank of Russia lowered the forecast for the GDP growth rate in 2019 from 1.0–1.5 to 0.8–1.3%. In 2020–2021, the growth rate of the Russian economy has also been revised downward, taking into account the expected slowdown in global economic growth. Acceleration of economic growth to 2–3% by 2022 is possible as the Government implements a set of measures to overcome structural limitations, including the implementation of national projects.
Inflation risks. Until the end of the year, disinflationary and proinflationary risks are balanced. Disinflationary factors are primarily associated with weak dynamics of domestic and external demand. At the same time, the growth of budget expenditures in the second half of 2019 - early 2020 is likely to be more distributed over time, which reduces the risk of a pro-inflationary effect from this factor. At the same time, in the event of a more significant decline in the growth rate of the global economy, including under the influence of tightening international trade restrictions and other geopolitical factors, there may be an increase in volatility in global commodity and financial markets, affecting exchange rate and inflation expectations.
Over a longer horizon, pro-inflationary risks from a number of internal conditions remain. Elevated and unanchored inflation expectations remain a significant risk. Medium-term inflation dynamics may also be influenced by fiscal policy parameters, including decisions on the use of the liquid part of the National Wealth Fund above the threshold level of 7% of GDP.
If the situation develops in accordance with the baseline forecast, the Bank of Russia will assess the feasibility of further reducing 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 dynamics of inflation relative to the target, economic development over the forecast horizon, as well as assessing 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, at which the issue of the level of the key rate will be considered, is scheduled for October 25, 2019. Time of publication of a press release on the decision of the Board of Directors of the Bank of Russia - 13:30 Moscow time.
Dynamics of the key rate of the Central Bank of the Russian Federation for 2013 - 2019
The key rate was declared as the main instrument of monetary policy from September 13, 2013. From this date until the end of 2013, it was 5.50% per annum, inflation at the end of 2013 was 6.45%.
In 2014, the key rate changed 6 times, all in the direction of growth. Russia ended 2014 with the Central Bank key rate of 17.00%. A sharp increase in the key rate to 17.00% per annum occurred on December 16, 2014. The Board of Directors of the Bank of Russia noted that this decision was due to the need to limit devaluation and inflation risks that have significantly increased recently. Inflation at the end of 2014 was 11.36%.
2015, which began with a rate of 17% per annum, continued with its gradual decrease. During 2015, there were 5 changes in the key rate, and there were 6 rates during the year. The year ended with the key rate at 11.00%. Inflation at the end of 2015 was 12.90%.
During January - June 2016, the Bank of Russia periodically decided to maintain the key rate in force since 2015 at 11.0% per annum, from June 14 - reduced it to 10.50%, and from September 19, 2016, reduced it to - 10. 00%. At the end of 2016, the key rate was kept at 10.00%. Inflation at the end of 2016 was 5.4%.
Since the beginning of 2017, the key rate by the Bank of Russia has been maintained at 10.00%, and from the second quarter it began to be systematically lowered. During 2017, the key rate changed 6 times and decreased from 10.00% to 7.75% by the end of the year. Inflation in Russia in 2017 was 2.5%.
At the beginning of 2018, the key rate of the Bank of Russia was 7.75% per annum, from 02/12/2018 it was reduced to 7.50%., from March 26, 2018 it was reduced to 7.25% per annum, and from 09/17/2018 it was increased to 7 ,50%. From December 17, 2018, the rate was again increased to 7.75% and returned to the rate in force at the beginning of the year. The key rate of 7.75% will be valid until March 22, 2019.
Since the beginning of 2019, the Bank of Russia rate was 7.75% per annum, from June 17, 2019 - 7.50%, from July 29, 2019 - 7.25%, and from 09/09/2019 - 7.00% and which will remain valid until October 25, 2019. This is already the fourth key rate in 2019. The overall decrease in hectares per year was 0.75 percentage points.
Table of dynamics (changes) of the key rate of the Central Bank of the Russian Federation for 2013 - 2019
The table shows the dynamics (changes) of the Bank of Russia rate since its introduction (since September 13, 2013):
| Bet validity period | Bank of Russia key rate (%) |
|---|---|
| from September 09, 2019 - to October 25, 2019 (date may be confirmed) | 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, 2018 | 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, 2017 - to May 1, 2017 | 9,75 |
| from September 19, 2016 - to March 26, 2017 | 10,00 |
| from June 14, 2016 - to September 18, 2016 | 10,50 |
| from August 3, 2015 - to June 13, 2016 | 11,00 |
| from June 16, 2015 - to August 02, 2015 | 11,50 |
| from May 05, 2015 - June 15, 2015 | 12,50 |
| from March 16, 2015 to May 04, 2015 | 14,00 |
| from February 2, 2015 to March 15, 2015 | 15,00 |
| from December 16, 2014 to February 1, 2015 | 17,00 |
| from December 12, 2014 to December 15, 2014 | 10,50 |
| from November 5, 2014 to December 11, 2014 | 9,50 |
| from July 28, 2014 to November 4, 2014 | 8,00 |
| from April 28, 2014 to July 27, 2014 | 7,50 |
| from March 03, 2014 to April 27, 2014 | 7,00 |
| from September 13, 2013 to March 02, 2014 | 5,50 |
Definition and introduction history
The key rate of the Bank of Russia was first officially announced as the main instrument of monetary policy on September 13, 2013. Then, at the Board of Directors of the Bank of Russia, a new macroeconomic concept was introduced - "Key Bet", and the approach to monetary policy instruments was also changed.
It was on September 13, 2013 that the Board of Directors of the Central Bank of the Russian Federation made a historic decision to implement a set of measures to improve the instruments of the monetary policy system as part of the transition to an inflation targeting regime * .
Measures under the new monetary policy of the Bank of Russia include the following:
- introduction key rate by unifying interest rates on operations for providing and absorbing liquidity on an auction basis for a period of 1 week;
- formation of an interest rate corridor Bank of Russia and optimization of the system of instruments for regulating liquidity in the banking sector;
- changing the role of the refinancing rate in the system of instruments of the Bank of Russia.
The key rate of the Central Bank of the Russian Federation is a rate set by the Bank of Russia in order to have a direct or indirect impact on the level of interest rates prevailing in the country's economy, which occurs through lending by the Bank of Russia to commercial banks. That is, with its help there is an impact on the economy in order to achieve the planned level of inflation.
Regulation of the key rate, as a rule, is the main instrument of monetary policy of the Bank of Russia.
From January 1, 2016, the Bank of Russia adjusted the refinancing rate to the level of the key rate, and before this date the refinancing rate was of secondary importance and was indicated on the Bank of Russia website for reference.
That is, from September 13, 2013 until January 1, 2016, an entry was made on the Bank of Russia website (in the section of the main financial market indicators) that reflected new approaches to the system of monetary policy instruments. The entry looked like this:
- Key rate, % - 0.00
- For reference: refinancing rate, % - 0.00.
Important: The Board of Directors of the Bank of Russia (dated December 11, 2015) established that starting from January 1, 2016:
- the value of the refinancing rate is equal to the value of the key rate of the Bank of Russia determined on the corresponding date and its independent value is not established 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 use the key rate of the Bank of Russia in all regulations instead of the refinancing rate (about which the Prime Minister of Russia D. Medvedev signed an order).
So, the current key rate of the Bank of Russia is 7.00% per annum, and its validity period is from September 9, 2019 to October 25, 2019.
* Inflation targeting is a set of measures expressed in the selection of economic goals that must be influenced in order to achieve the planned level of inflation.
The dynamics of the refinancing rate from January 1, 1992 to September 13, 2013 can be viewed
Since the beginning of 2016, the refinancing rate has been set at 11%. Over the previous 12 months the figure was 8.25%. The value did not change from September 2012 until December 31, 2015. The decision to increase the indicator was made on December 11, 2015 at the Board of Directors of the Bank of Russia. The goal was achieved by equating the refinancing rate to the key rate of the Central Bank of the Russian Federation.
Calculation of penalties at the refinancing rate 2015
In accordance with the law, the penalty is calculated in case of failure to fulfill a financial obligation. This is done provided that the contract contains no language regarding the payment of penalties.
According to the law, even if the contract does not provide for penalties, they must still be paid in accordance with the established algorithm.
For each day of delay, a certain percentage of the amount is charged, which is equal to a small fraction of the refinancing rate. The calculation formula looks like this: Penalty = Amount of debt * refinancing rate * number of days of delay / 360.
Refinancing rate in 2014
Throughout 2014, the refinancing rate remained at 8.25%, the key rate of the Central Bank of the Russian Federation was fixed at 17%, and the inflation rate for this period was 11.4%. Throughout 2014, there were constant discussions about adjusting the refinancing rate in accordance with the level of the key rate, but in fact the value of the indicator did not change from January to December. The end of the year was marked by a sharp increase in the key rate, against the background of which the leadership of the Central Bank of the Russian Federation decided to leave the refinancing rate unchanged.
Refinancing rate 2015
Throughout 2015, the financial regulator reduced the refinancing rate several times. On February 2, the figure changed from 17% to 15%; on March 16, another change was recorded from 15% to 14%; on May 5, a decrease followed from 14% to 12.5%. The next decrease was recorded on June 16, 2015 to the level of 11.5%.
The board of directors of the regulator explained the decrease in the refinancing rate by a noticeable slowdown in the rate of economic development within the country and a weakening of the inflation risk factor. In the future, the Central Bank of the Russian Federation also intends to adhere to the policy of reducing the refinancing rate while recording a slowdown in the growth of consumer prices.
Advice from Sravni.ru: There is an opinion that the main reason for reducing the key rate is not related to inflation expectations, but is dictated solely by the desire to depreciate the ruble in order to compensate for the loss of profit to oil and gas market players. At the same time, in order to suppress speculation on the part of commercial banks and again to reduce the ruble exchange rate, the regulator is increasing foreign exchange repo rates.
Not only commercial firms, but also banks themselves need money supply. They can get it from the Central Bank of Russia, which issues a loan at a certain percentage. The refinancing rate is the percentage at which the Central Bank of the Russian Federation helps other commercial banks. It is an important economic indicator on which the conditions established by accredited financial institutions for their clients depend.
In banking practice, refinancing is a procedure whose purposes may include:
- reduction in borrower expenses due to the appearance of more favorable terms of a new loan
- extension of the loan period at the expense of the Central Bank of the Russian Federation.
What does the refinancing rate of the Central Bank of the Russian Federation depend on?
Today, the rate is formed under the influence of the market and the most active operations of the Central Bank. At its core, it is the lowest percentage operating in the Russian Federation. The exclusive right to determine its size belongs to the Central Bank. When forming it, the following rules are taken into account:
- its size cannot be lower than the inflation rate
- If a country has a balance of payments surplus, the rate increases
- The balance of payments deficit leads to a decrease in the refinancing rate
If the size of this indicator decreases, then everyone benefits, including commercial bank borrowers. But any change in it indicates that in the near future interest rates on loans and deposits will be revised.
Refinancing rate in 2013
From September 14, 2012 and throughout 2013, the rate was 8.25%. Before this date, this figure was 8%. This decision was made based on an assessment of inflation risks and economic growth prospects. At the same time, from June 11, 2013, rates on certain transactions were reduced by 0.25%. These included repos, loans that were backed by gold and non-marketable assets. This brought the cost of raising funds for credit institutions from the Central Bank of the Russian Federation closer to the level of rates for all main operations.
This figure currently stands at 8.25%. As expected in 2013, the Central Bank continued its financial policy of maintaining the exchange rate and non-interference in the dynamics of the Russian ruble exchange rate. Therefore, financial restrictions on the exchange rate of the national currency were not introduced. Today, the bank plans to increase the flexibility of rate formation by reducing the volume of investments and increasing the sensitivity of the operating interval level.
Unstable external conditions and increased volatility in financial markets have led to increased economic uncertainty. Therefore, as of August 2014, the Central Bank of the Russian Federation is faced with the task of limiting the inflationary consequences of exchange rate dynamics and maintaining financial stability in the country. Accordingly, the Central Bank will not reduce the interest rate in the near future. However, inflation may rise, which could have an impact on prices. On the other hand, a smaller scale of indexation of regulated prices and tariffs should slow down inflation in the second half of 2014.
