At the meeting of the Central Bank of Russia on September 13, a decision was made to raise the key interest rate to 19% per annum. This is the highest level since April 2022, when the key rate was at 20%.
The decision to raise the key rate was made in response to the current economic situation in Russia. The country is facing high inflation rates, which have been steadily increasing over the past few months. Inflation is a measure of the general rise in prices of goods and services in an economy. It is a major concern for the Central Bank as it can have a negative impact on the country’s economy and the standard of living of its citizens.
The latest data from the Federal State Statistics Service shows that inflation in Russia reached 6.7% in August, the highest level in almost four years. This is well above the target level of 4% set by the Central Bank. The sharp increase in inflation is mainly due to rising prices for food, fuel, and other essential goods. This has been exacerbated by the global economic situation, including the ongoing pandemic and the rise in prices of commodities such as oil and gas.
In order to curb inflation, the Central Bank has been gradually raising the key interest rate since the beginning of this year. The key interest rate is the rate at which commercial banks can borrow money from the Central Bank. By increasing this rate, the Central Bank aims to make borrowing more expensive, which in turn can help reduce consumer spending and slow down the rise in prices.
The decision to raise the key rate to 19% was not unexpected, as many experts had predicted a further increase. However, the magnitude of the increase was a surprise to some. The previous increase, in July, was only 1%, while this time it was 2%. This shows that the Central Bank is taking a more aggressive approach in tackling inflation.
Some may argue that such a drastic increase in the key rate could have a negative impact on the economy, especially on businesses and individuals who have loans or mortgages. However, the Central Bank has assured that the increase will not have a significant impact on the overall lending rates in the country. This is because the Central Bank’s key rate only affects the rates at which commercial banks can borrow money, and not the rates at which they lend to their customers.
Moreover, the Central Bank has also stated that the increase in the key rate is a temporary measure and will be adjusted as the inflation situation improves. This shows that the Central Bank is closely monitoring the situation and is ready to take necessary actions to stabilize the economy.
The decision to raise the key rate to 19% has been met with mixed reactions. Some see it as a necessary step to control inflation and stabilize the economy, while others are concerned about the potential negative impact on businesses and individuals. However, it is important to understand that the Central Bank’s main goal is to maintain price stability and ensure the long-term sustainable development of the economy.
In conclusion, the decision to raise the key interest rate to 19% by the Central Bank of Russia is a crucial step in addressing the current economic challenges facing the country. It shows the commitment of the Central Bank to maintain price stability and ensure the well-being of its citizens. As the situation improves, we can expect to see a gradual decrease in the key rate, which will have a positive impact on the overall economic situation in the country.
