The Central Bank raised the key rate to 21%, which is a record high for Russia

The Bank of Russia raised the key rate by 200 bps at once. — from 19 to 21%. This is an absolute record. Moreover, the Central Bank is ready for a new tightening.

The previous maximum was 20% and was reached in February 2022. Last time, at a meeting on September 13, the board of directors raised the rate from 18% to 19%.

After that, representatives of the regulator repeatedly said that they would consider another tightening to achieve the 4% inflation target. The key rate is the interest rate at which the Central Bank issues loans to commercial banks. Regulation of this indicator is one of the instruments of the monetary policy of the state, the purpose of which is to contain or increase inflation, as well as stimulate economic growth.

"Further tightening of monetary policy is required in order to ensure the return of inflation to the target and reduce inflation expectations. The Bank of Russia admits the possibility of raising the key rate at the next meeting," the Central Bank said in a release. The regulator believes that in order for inflation to return and stabilize around 4%, a higher trajectory of the key rate is needed than it was predicted in July.