The key rate of the Bank of Russia

Key rate decisions affect all banking products. The operational objective of the Bank of Russia is to keep the money market rate close to the key rate. The Bank of Russia minimizes the spread (difference) between the RUONIA rate and the key rate. If before the transition to inflation targeting the spread in 2013-2014 was 2%, after the transition, by the end of 2019, it decreased to 0.5%. The reduction of the spread indicates an increase in the efficiency of liquidityliquidity management in the banking sector.

Key rate decisions affect all banking products. The operational objective of the Bank of Russia is to keep the money market rate close to the key rate. The Bank of Russia minimizes the spread (difference) between the RUONIA rate and the key rate. If before the transition to inflation targeting the spread in 2013-2014 was 2%, after the transition, by the end of 2019, it decreased to 0.5%. The reduction of the spread indicates an increase in the efficiency of liquidity management in the banking sector.

The Board of Directors of the Bank of Russia meets eight times a year to discuss the key rate. At the end of each meeting, the Bank of Russia publishes a press release on the key rate.

The key rate plays an informational-signaling role and characterizes the direction of monetary policy. Depending on what operations the Bank of Russia carries out on the key rate, the monetary policy can be hard or soft. The key rate is equal to the minimum interest rate at repo auctions of the Bank of Russia for a period of one week, or the maximum interest rate at deposit auctions of the Bank of Russia for a period of one week. The key rate is set by the Board of Directors of the Bank of Russia eight times a year. Changes in the key rate affect credit and economic activity and, in the long term, make it possible to achieve the ultimate goal of monetary policy - price stability, i.e. low and stable inflation.