Key rate increase

On September 15, 2023, the Bank of Russia raised the key rate by 100 basis points, from 12% to 13%.

This is the third increase in the last six months. In July this year, the Central Bank raised the rate from 7.5% to 8.5%. In August, apparently against the background of a weakening of the ruble, the regulator sharply raised the rate by 350 basis points at once – from 8.5% to 12%

This measure, according to the regulator, is aimed at "limiting the risks to price stability". In other words, in this way, the Central Bank is trying to avoid an increase in inflation rates due to a sharp depreciation of the ruble.

The target inflation rate was set at 4%. However, despite the sharp increase in the key rate, by the end of August, annual inflation rose to 5.15%. Thus, in August it was not possible to reduce the growth of consumer demand, which automatically leads to higher prices.

In September, the Ministry of Economic Development set the inflation forecast in Russia for 2023 at 7.5%. The Central Bank was also forced to adjust its forecast, the new year-end inflation figures are set at 6-7%.

However, the regulator hopes that in 2024 the inflation rate will return to the planned 4-4.5%.