Bank interest rate. Refinancing rate of the Central Bank of the Russian Federation. The relationship between the key rate and the refinancing rate

The current refinancing rate (key rate) of the Central Bank of the Russian Federation is 7.75% (valid from December 17, 2018 to the present)

Refinancing rate– this is another way of supplying money to other banks. The Central Bank of Russia lends money to commercial banks and others financial institutions, and they, in turn, give loans to both ordinary citizens (individuals) and various companies and organizations ( legal entities).

In practice, it looks like this: a commercial bank can take from the Central Bank, say, one million dollars. After a year, he is obliged to return to the central bank the total amount of a million American money + interest that accrued during this time at the same refinancing rate. During this year, a commercial bank lends money to the population and organizations at a higher interest rate than the refinancing rate - and makes a profit. The population receives loans central bank there is no loss either - everyone seems to be happy.

In numbers, this may look like this: let’s say the refinancing rate is 10% (you can find out the exact rate today at the end of the article). The bank borrows a certain amount of money from the Central Bank of Russia at 10% per annum, and then gives this money to ordinary citizens, for example, at 18% per annum. The bankers pocket the resulting difference.

Why doesn't the state Central Bank lend money directly to people?

The Central Bank works only with large sums; there are not millions, but tens and hundreds of millions of dollars circulating there. To put it simply, “it’s not the king’s business to give loans to every old woman.”

It turns out that banks act as intermediaries, but this is even to our benefit, since banking organizations have an extensive structure with hundreds of offices and ATMs throughout the country, which allows ordinary citizens to find the branch closest to their home and receive the necessary financial services.

Can a commercial bank get more and cheaper money from the Central Bank, and distribute its loans at a higher price?

Roughly speaking, yes, it can. But quite a big difference commercial banks they can’t install – there’s competition, though!

If you “tear three skins”, clients will run away to another bank. And you'll stay with state sum money, but you have to return it!

Therefore, as a rule, lending rates in different credit institutions do not differ much.

True, there are exceptions to the rules here. It's about O credit organizations, which are engaged in large stores, as well as lending using cards sent by mail. Examples of such organizations: Home Credit Bank, Russian Standard, OTP Bank, Alfa Bank, Renaissance Credit and others. Interest rates in such cases can reach 30-70%. This is achieved through the psychological aspects of human behavior, as well as low level financial literacy.

Where does the specific refinancing rate come from?

The refinancing rate is determined based on the current economic situation in the country and. If the inflation rate rises, the central bank increases the refinancing rate. If the inflation rate decreases, the Central Bank lowers the refinancing rate.

It usually looks like this: when the refinancing rate is low, loans become available. Interest rates on loans are falling and people are willing to take them out. Of course, you will have to overpay a little, then borrowing money is profitable. You can buy a lot of things and pay off little by little.

Even better for businesses. The more money they attract into their business and the cheaper this money is, the more goods they can produce and the more revenue they will receive.

As a result, when people have a lot of money in their hands, there are more purchases, as a result of which goods usually begin to become more expensive. People are starting to sweep everything off the shelves. There are not enough goods for everyone and sellers begin to raise their prices. Along with this, inflation begins to rise.

Let me remind you when different periods time, for the same amount of money, you can buy different quantities of the same product.

High level inflation affects people's well-being. The higher the inflation, the lower the level of well-being of people and the more dissatisfied they are. And this is already a threat to the government of the country, since dissatisfied people can rebel and choose other rulers.

That's why, refinancing rate acts as a certain tool to influence the level of inflation in the country. To reduce inflation, the refinancing rate is raised. What makes loans more expensive? It becomes unprofitable and expensive for people to take them, which ultimately affects their purchasing power.

People have less money and people start spending less. The funds earned go only to the essentials. We have to give up delicacies and newfangled gadgets. Because of this, sales in stores fall and sellers begin to reduce prices on goods. All this leads to lower inflation.

Refinancing rate and taxation

It is worth noting that in addition to the cases listed above, the refinancing rate is also applied in taxation.

• In particular, income is taxed on income that exceeds the refinancing rate + 5 percentage points. For example, if you opened a deposit at 15 percent per annum, and the refinancing rate was 10%. Then, to calculate, we add 5 to 10 and get the same 15%. That is, no tax will be charged on deposit income. But if you then register new contribution at 16% per annum at the same refinancing rate, then you will have to pay a tax of 35% on 1% of the income received on the deposit.
• Also, the refinancing rate helps determine the amount of compensation that the employer is obliged to pay to the employee in the event of delays in wages, vacation pay or money due upon dismissal. By law, the employer is obliged to reimburse the amount due + monetary compensation in the amount of not less than 1/300 established rate refinancing for each overdue day.
• And finally, the refinancing rate is used to determine penalties for persons who owe taxes and various fees. To do this, use the following formula:

Changes in the refinancing rate from 1992 to the present day:

Conclusion

We hope that our article helped answer your question: What is the refinancing rate of the Central Bank of the Russian Federation and why is it needed? And if you still have questions, you can ask them below in the comments.

What is the key rate of the Central Bank of the Russian Federation for today in 2018? What is the “key rate” of the Central Bank of the Russian Federation? Where to view the summary table by values key rate Bank of Russia? How does a reduction in the key rate affect loans and deposits? What do businessmen and accountants need to know about the key rate? We will answer the main questions and provide a single table with rates.

Key rate value today

The key rate is the interest rate on the main operations of the Bank of Russia to regulate the liquidity of the banking sector. This indicator is considered an indicator of monetary policy. The concept of “key rate” was introduced by the Bank of Russia on September 13, 2013. And from January 1, 2016, the Bank of Russia equated the refinancing rate to the value of the key rate (directive of the Bank of Russia dated December 11, 2015 No. 3894-U). The key rate of the Central Bank of the Russian Federation for today is shown in the table (by year):

Also on the website of the Central Bank of the Russian Federation you can always find the official key interest rate for today. Information is displayed on home page Central Bank:

Many people quite often come across various news about the key rate on television, radio or on the Internet. So, for example, in Lately Is there more and more news about the Central Bank of the Russian Federation cutting its key rate? But how should we approach this? Is it good or bad? Many people don’t think about this and believe that the trend towards lowering the key rate does not affect their lives in any way. But is this really so?

If an increase or decrease in the key rate is not so important for ordinary people, then why does the news about the next meeting of the Central Bank of the Russian Federation on the issue of changing the key rate occupy the top lines? We will talk about this further and give examples of the impact of the size of the key rate not only on ordinary citizens, but also on business.

How the Central Bank of the Russian Federation changes the value of the key rate

Only the regulator, the Bank of Russia (Central Bank of the Russian Federation), has the right to increase or decrease the key rate. For these purposes, special meetings are held at which the commission decides on the possibility of adjusting the current key rate. Based on the results of such meetings, the Central Bank of the Russian Federation issues press releases about decisions made which are published on the website of the Central Bank. The key rate is reduced or raised by “basis points”. Therefore, in official data the abbreviation “bp” is usually used.

IN official press releases, as a rule, the prerequisites for making a particular decision on the key refinancing rate are described in some detail. So, for example, in a press release dated September 15, 2017, the Central Bank of the Russian Federation announced a reduction in the key rate by 0.5 percentage points to 8.5%. It is explained that the following factors were taken into account when making this decision:

• inflation dynamics;
• monetary conditions;
• economic activity;
• inflation risks.

On October 27, 2017, the Central Bank continued to reduce the key rate and lowered it to 8.25 percent. The Central Bank noted the continued economic growth and increased inflation expectations. The Central Bank intends to continue to move from moderately tight to neutral monetary policy.

Why do bankers analyze these indicators? How, for example, are economic activity and inflation in a country related to the size of the key rate? This will be discussed further.

The calendar of meetings of the Central Bank of the Russian Federation on the key rate can be found on the Bank of Russia website. It is posted at this link. For example, the next meeting on the rate is expected on October 27, 2017.

Key rate: loans and deposits

The key interest rate is the rate at which the Central Bank can provide loans to commercial banks. Also, at the key rate, the Central Bank is ready to accept money from banks for deposits. Let us explain these questions in more detail.

Loans

From a practical point of view, commercial banks cannot take money from the Central Bank and issue it in the form of loans to the population or business, since the Central Bank of the Russian Federation can issue money at the key rate only for a short period of time - 7 days. At the same time, for example, mortgage loans– long-term and issued for several years. Therefore, to issue loans, banks must have other sources of financing (for example, their own funds). However, if the opportunity for banks to obtain money from other sources ceases, then the bank turns to the Central Bank for help.

Thus, adjustments to the Central Bank’s key rate affect changes in the rates at which banks offer loans (including mortgages) to the population. And if the key rate decreases, then this is a signal to reduce interest rates bank loans. And the cheaper ones borrowed funds, in turn, will allow industry to develop more actively and increase demand for consumer loans and mortgages among citizens.

Recently, the key rate has been gradually decreasing. So, for example, if on September 19, 2016 its size was 10 percent per annum, then a year later (as of September 18, 2017) the key rate dropped to 8.5 percent (see table above).

Along with the key rate, commercial banks reduce loan rates. For example, from June 1, 2017, Sberbank reduced interest rates on housing loans for the purchase of new buildings, and from June 5, on other basic mortgage products. The decrease was 0.20-0.75 percentage points. It is noted that Sberbank is observing a stable recovery in demand for mortgages: the volume of applications since the beginning of 2017 has been growing compared to the same period in 2016.

Here are other examples. The Bank of Russia decided to reduce the key rate by 50 basis points from September 18, 2017 to 8.50% per annum. In such conditions, approximate mortgage rates for new buildings start at 9 percent per annum.

The key rate is not the only factor influencing demand in the mortgage sector. Lowering the rate creates conditions for the formation of more interesting products on the lending market as a whole. However, a powerful driver in shaping the demand for mortgages in general is the general state of the economy and people’s confidence in the future.

Deposits

A decrease in the key rate leads to a reduction in deposit rates. And this wave is justified, since it simply becomes unprofitable for banks to attract deposits from individuals and businesses at a higher interest rate.

The point is that when a person or organization opens a deposit in a bank, he, in essence, lends money to the bank for a certain period. For this, the bank pays him income in the form of annual interest. Why should a bank pay more on a deposit than the key rate, if at the key rate a commercial bank can borrow money from the Central Bank? And in quite large volumes. Understanding this, banks accept deposits from the public or business at a lower percentage than the official key rate.

It would be strange if banks borrowed money from the population at rates higher than the key rate. After all, if deposit rates exceed the key rate, then banks will work at a disadvantage. For example, with the official key rate at 8.5 percent, even the most “profitable” deposits are offered by banks at lower interest rates.

If you are offered to open deposits at rates that exceed the key rate, then be especially careful. This should, at a minimum, alert a potential investor.

A decrease in the key rate leads to a decrease in deposit rates, which, in turn, forces the population and business to look for an alternative to bank deposits.

The key rate determines the price of money for commercial banks, and they, in turn, provide loans to companies and individuals. If the Central Bank of the Russian Federation increases the key rate, then money becomes more expensive, and this along the chain leads to commercial banks raising their rates on loans and deposits for the population and enterprises.

And vice versa: If the Central Bank of the Russian Federation increases the key rate, then it becomes more expensive for banks to borrow money from the Central Bank of the Russian Federation. And banks are raising deposit rates. In this way, banks attract money from the population and business on more favorable terms for themselves and investors. So, for example, when during the crisis the key rate jumped to 17% per annum, banks also began to raise deposit rates. Then you could find the following news:

However, when the key rate began to decline, deposit rates also crept down.

Key rate and inflation: relationship

The Bank of Russia uses the key rate to influence inflation. The plans of the Central Bank of Russia include small inflation - at the level of 4% per year. The regulator’s economists analyze the data and make a calculation: what should the key rate be at the moment in order for inflation to decrease and the economy to work.

If interest rates on loans and deposits rise, individuals and firms want to borrow less—which means spend less and invest less—and everyone wants to save more. As a result, the demand for goods and services decreases, and, accordingly, inflation decreases.

And vice versa: if the Bank of Russia lowers the key rate, money becomes cheaper, interest rates on loans and deposits for households and firms are reduced, everyone takes out more loans, spends more, invests more, and saves less. This leads to increased demand and accelerated inflation.

Does the dollar exchange rate affect the key rate? Certainly! The country's economy depends on the dollar exchange rate. The state of the economy is related to consumer lending. And lending is linked to the key rate. Further in the table you can trace the dynamics of growth and decline in inflation in connection with changes in the key refinancing rate in 2015-2017:

How the key rate affects business

A change in the key rate entails not only a change in lending and investment conditions. There are a number of business issues that are related to the value of the key rate. Let's talk about them. In this case, in our calculations we will take into account the key rate in force since September 18, 2017 – 8.5 percent. Therefore, keep in mind that you may need to use a different key rate figure in your calculations.

Compensation for delayed salary payment

If an employer fails to pay employees wages (vacation pay or dismissal pay) on time, then the employees are entitled to compensation for the delay. This is provided for in Article 236 of the Labor Code of the Russian Federation. The amount of compensation for delayed wages is determined in the collective or labor agreement. If the amount of compensation is not established by an employment or collective agreement, then it is calculated based on 1/150 of the key rate for each day of delay. Compensation for delayed wages is calculated using the formula:

Let's assume that the amount of salary arrears amounted to 590,000 rubles. The delay period is 32 days. During the delay, the key rate was in effect - 8.50%. To calculate compensation, wage arrears must be multiplied by 1/150 of the key rate and the number of days of delay. Accordingly, compensation for each day will be 10,698.67 rubles. (RUB 590,000 × 8.50% / 150 × 32).

Penalties for taxes and insurance premiums

The amount of penalties that must be paid in case of untimely transfer of taxes or insurance contributions to the budget depends on the size of the key rate. By the way, from October 1, the procedure for calculating tax penalties (for delays in paying taxes and contributions transferred to the Federal Tax Service) is changing. Thus, for debts arising from October 1, 2017, their rate depends on the number of days of delay:

• in case of delay of up to 30 calendar days inclusive, penalties are calculated based on 1/300 of the Central Bank refinancing rate, which is equal to the key rate;
• in case of delay of more than 30 calendar days: for the first 30 days based on 1/300 of the rate, and for subsequent days - based on 1/150 of the rate.

Late refund of taxes and contributions

If the Federal Tax Service has returned the overpayment of taxes or insurance premiums with a delay, then the tax authorities are obliged to pay interest to the company or individual entrepreneur at the key rate (Article 78 of the Tax Code of the Russian Federation). By general rule, they must transfer the money to the current account within a month after they received the application for the return of the overpayment (clause 6 of Article 78 of the Tax Code of the Russian Federation). But tax authorities may not meet this deadline. Then you need to calculate interest taking into account the key rate using the formula:

Example. The organization filed an application for a refund of overpayment of tax in the amount of 276,000 rubles. However, the tax authorities returned the overpayment 22 days late. The accountant submitted an application to the Federal Tax Service for payment of interest for the delay in tax refund. The amount of interest was 1414 rubles. (276,000 × 8.5% / 365 days × 22 days).

Material benefits from loans

If an organization or individual entrepreneur has issued an employee, founder, to CEO or a loan to other individuals, then the accountant needs to calculate personal income tax on a monthly basis for material benefits. It occurs if the amount of interest on the loan is less than 2/3 of the key rate (subclause 1, clause 2, article 212 of the Tax Code of the Russian Federation). Personal income tax must be withheld from income at a rate of 35 percent (clause 2 of Article 224 of the Tax Code of the Russian Federation). In this case, the material benefit must be calculated monthly - on the last day of each month during the period for which the loan was received.

Example. In 2017, the organization issued an interest-free loan to the director for a year. The loan amount is RUB 900,000. The material benefit for a full month (October 2017) will be 4331.50 rubles. (RUB 900,000 × 2/3 × 8.50% / 365 days × 31 days). Personal income tax will be 1516 rubles. (4331.50 × 35%).

Freezing accounts

Taxpayers must pay interest at the key rate for each calendar day of illegal blocking of the current account of an organization or individual entrepreneur (clause 9.2 of Article 76 of the Tax Code of the Russian Federation). Let’s say in 2017, the Federal Tax Service illegally blocked a company’s account for a period of 12 days. There were 340,000 rubles in the blocked account. The amount of interest for illegal account blocking will be 950.13 rubles. (RUB 340,000 × 12 days × 8.50% / 365 days).

Interest on late obligations and legal interest

If suppliers (sellers) or buyers violated the terms of the contract, then they can be required to compensate for losses. There are three types of this kind of compensation:

• penalty (fine, penalty);
• interest on arrears;
• legal interest for using money.

It is possible to collect both the penalty and interest at the same time only if the parties have specified such a condition in the contract (Articles 317.1, 330 and 395 of the Civil Code of the Russian Federation).

Penalty

The condition of a penalty is prescribed in the contract (Article 331 of the Civil Code of the Russian Federation). In the business environment, two types of penalties are used:

• fines (flat amount or percentage of the amount);
• interest or penalties (for days when the counterparty did not fulfill obligations under the contract or performed in violation).

The amount of the penalty and the calculation procedure are established in the contract. Most often, the parties fix the penalty based on 1/300 of the key rate.

Interest on overdue

If the counterparty does not pay under the contract on time or repays the debt late, then the company or individual entrepreneur has the right to collect interest from him for each day of delay. The interest rate is usually specified in the contract. If the amount of interest is not specified in the contract, then the amount of interest is calculated based on the key rate for periods of delay. When calculating interest, the actual number of days in the year and month is taken into account. The amount of interest is calculated using the formula:

Legal interest

Interest can be accrued for the period of use of money when it is expressly provided for by law or contract. This is the so-called “legal interest”. If neither the law nor the agreement states such legal interest, then it is impossible to demand it from the counterparty. If the parties initially agree not to charge legal interest, then this is not written in the agreement. Such rules have been prescribed in Article 317.1 of the Civil Code of the Russian Federation since August 1, 2016.

However, until August 1, 2016, the creditor was entitled to "legal interest" by default. They were accrued automatically, unless otherwise provided by law or agreement (Article 317.1 of the Civil Code of the Russian Federation as amended before August 1, 2016). These interests are also calculated based on the key rate that was in effect during the period of use of the funds.

Key Rate Key Takeaways

So, now we present the main conclusions about the key rate that an ordinary citizen or businessman needs to understand:

• if the key rate decreases, then loans become more accessible;
• if the key rate decreases, then deposits become less attractive;
• An increase in the key rate entails an increase in rates on deposits and loans.
• the key rate affects inflation.

If you are running a business, then the key rate affects the following indicators for you:

• penalties for late payment of taxes and contributions;
• compensation for delayed wages;
• interest on late obligations and legal interest;
• material benefits from loans.

The Bank of Russia has updated its key rate. See what rates are in effect today, download the full table of refinancing rates of the Central Bank of the Russian Federation for 2019 and previous periods of 2018.

The value of the refinancing rate of the Central Bank of the Russian Federation for today (2018-2019)

The Central Bank of the Russian Federation abolished the concept of the refinancing rate in 2016, now it is called the key rate. The Bank of Russia periodically approves the size of the key rate, the value of which corresponds to the refinancing rate. On December 14, 2018, the Central Bank approved the rate for the beginning of 2019, and on February 8 and March 22, 2019, it kept it at the same level. See below what size is valid today.

Today the refinancing rate approved by the Central Bank of the Russian Federation is 7.75%. It has been in effect since December 17, 2018 (information is posted on the official website of the Bank of Russia). This is the second increase in the last four years - before that the figure was only declining. On March 22, 2019, at the next meeting of the Board of the Central Bank, the regulator left the rate at the same level.

Table of changes in the refinancing rate in 2018-2019

The interest rate (refinancing) was changed by the Central Bank of the Russian Federation several times. Below see the full table of rate values ​​in 2018 - 2019.

Refinancing rate of the Central Bank of the Russian Federation for 2018-2019

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 April 26, 2019. The time for publishing a press release on the decision of the Board of Directors of the Bank of Russia is 13:30 Moscow time. According to forecasts, the refinancing rate of the Central Bank of the Russian Federation in 2019 will be stable.

How to check the rate for today on the official website of the Central Bank of the Russian Federation

You can check the current rate on the official website of the Central Bank of the Russian Federation cbr.ru

Important! On the official website of the Central Bank, see the value of the key rate for today. From January 1, 2016, the refinancing rate is equal to the key value.

Why does an accountant need to know the refinancing rate?

The accountant needs to know the refinancing rate in the following cases:

• Calculation of penalties for late payment of taxes and fees;
• Calculation of material benefits from savings on interest when calculating personal income tax;
• Calculation of compensation for delayed payment of wages and other similar payments.

Breaking news: The Ministry of Finance is developing

Below we will look at examples of how the refinancing rate is used in these cases in 2018, and how its change affects the calculation.

Penalties for late payment of taxes and fees

Any delay in paying taxes and fees entails the need to pay penalties. The amount of penalties is determined by the formula:

Example. Calculation of penalties

On July 25, 2018, the accountant submitted the VAT return for the 2nd quarter of 2018, and transferred 1/3 of the tax to the budget only on July 30. The amount of tax payable was 400,000 rubles.

Thus, the company was 4 days late in paying the tax (from July 26 to July 29).

The refinancing rate did not change during this period and amounted to 7.75%.

At the same time as paying the tax, it is necessary to transfer a penalty in the amount of 413.33rub. (RUB 400,000 * 7.75%: 300 * 4 days)

Important! If the refinancing rate changed during the period of late payment, then when calculating penalties, use the corresponding values ​​for the periods of their validity.

Material benefits from saving on interest

In 2018, the date of receipt of income an individual savings on interest will be the last day of the month, so the accountant must know the interest rate (refinancing) of the Central Bank of the Russian Federation for today.

Use the following formula to calculate the amount of material benefit:

Important! To calculate the material benefit from saving on interest, changes in the rate “within” the month do not matter.

Compensation for delayed salary payment

Compensation for delayed payments to the employee is calculated based on 1/150 of the refinancing rate in effect today. Use the following formula:

Example. Compensation calculation

The company delayed payment of wages for January 2018 by 10 days. The total amount of debt was 500,000 rubles.

The key rate in January 2018 was 7.75%.

The amount of compensation was 2 rubles. (RUB 500,000 / 150 * 7.75% * 10 days)

Important! If the rate changed during the period of delay in payment to employees, then when calculating compensation, use the corresponding values ​​for the periods of their validity.

Let's tell you what the indicator is refinancing rates in 2017, why you need to have this information and when to apply it in practice.

Basics

Other name refinancing rates of the Central Bank of the Russian Federation – discount rate. It is measured as a percentage. This indicator is set by the Central Bank. It is also the Bank of Russia.

It is one of the key factors in the economic environment. Its main goal is to show how much a loan from the main bank of the country costs for an ordinary bank. But not only. It is also actively used for tax purposes, as well as for calculating sanctions against both controllers and payers - penalties at the refinancing rate and fines. It is directly related to the delay in the return of mandatory payments. Therefore, every accountant must operate with the most accurate and up-to-date data on its meaning.

Sometimes the refinancing rate serves as a guideline for interest for deferment or installment payment of taxes (clause 4 of article 64 of the Tax Code of the Russian Federation). In addition, interest for the investment tax credit is calculated on its basis.

It should be noted that some time ago the Central Bank of the Russian Federation introduced a similar indicator - the key rate, which confused and confused many practitioners. Particular difficulties arose when it was necessary to find out the amount of interest on a controlled debt, which made it possible to reduce income tax. There were reasonable doubts about which rate to focus on – the key rate or the refinancing rate. This was not clear from the text of the relevant rules of the Tax Code.

But recently all doubts have been dispelled. The fact is that since 2016 these two indicators have been unified. The following approach was chosen: from January 1, 2016, the refinancing rate was equal to the key rate for a specific date. Since that time, the Central Bank of the Russian Federation has not separately determined the percentage of the refinancing rate. Simply put, they will change simultaneously.

Size this year

At the time of writing this article refinancing rate in 2016 year acquired two meanings. So, from the beginning of the year it was 11 percent. Since June 14, it has been slightly reduced - to 10.5 percent. On September 16, 2016, the Central Bank of the Russian Federation, following a meeting, reduced the rate to 10 percent. Cm. " ". That's how calculating the refinancing rate for today. 2016 the year shows an encouraging trend.

From an economic point of view, this decrease means a positive trend. First of all, due to a decrease in the rate of price growth.

We also note that in the 1st-2nd quarter of 2017, the leadership of the Central Bank of the Russian Federation plans to again raise the issue of reducing official refinancing rate. But it’s not a fact that there will actually be adjustments.

In general, it is interesting to trace the dynamics refinancing rates by year. This very clearly shows what is happening to the economy of our country. For what - see refinancing rates in the table (including refinancing rate indicators in 2017).

central bank Russian Federation(Bank of Russia)
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Information

The Bank of Russia decided to maintain the key rate at 7.75% per annum

On April 26, 2019, the Board of Directors of the Bank of Russia decided to maintainkey rate at the level of 7.75% per annum. In March, annual inflation passed a local peak and began to slow down in April. At the same time, the current growth rate of consumer prices is slightly lower than the forecast of the Bank of Russia. In April, households' inflation expectations increased slightly after their noticeable decline in March. Price expectations of enterprises continued to decline, but remain at elevated level. Short-term pro-inflationary risks have decreased. The decisions of the Bank of Russia to increase the key rate in September and December 2018 were sufficient to limit the effects of one-time pro-inflationary factors. According to the Bank of Russia forecast, annual inflation will return to 4% in the first half of 2020.

– III quarters of 2019.

Inflation dynamics. Annual inflation passed a local peak in March. The annual growth rate of consumer prices in March increased to 5.3% (from 5.2% in February 2019). In April, annual inflation began to slow down and, according to estimates as of April 22, fell to 5.1%. At the same time, the current growth rate of consumer prices is slightly lower than the forecast of the Bank of Russia. The transfer of the VAT increase to prices is largely complete.

The proactive decisions of the Bank of Russia to increase the key rate in September and December 2018 contributed to the return of the monthly growth rate of consumer prices to levels close to 4% in annual terms. The dynamics of consumer demand have a restraining effect on inflation. In addition, temporary disinflationary factors also contributed to the slowdown in consumer price growth, including the strengthening of the ruble since the beginning of this year, lower prices for main types of motor fuel and certain food products in March - April relative to February.

In April, households' inflation expectations increased slightly after their noticeable decline in March. Price expectations of enterprises continued to decline, but remain at an elevated level.

According to the Bank of Russia forecast, annual inflation will return to 4% in the first half of 2020.

Monetary conditions. Since the previous meeting of the Board of Directors of the Bank of Russia, monetary conditions have not changed significantly. OFZ yields and deposit-credit rates remained close to the levels of the end of March. At the same time, the decline in OFZ yields that has occurred since the beginning of this year creates conditions for a reduction in deposit and lending rates in the future.

Economic activity. Revision by Rosstat of data on GDP dynamics in 2014 – 2018 does not change the Bank of Russia’s view of the current state of the economy - it is close to potential. The dynamics of consumer demand and the situation on the labor market do not create excessive inflationary pressure. In the first quarter, the annual growth rate of industrial production was moderate and slightly lower than in the fourth quarter of last year. Investment activity remains subdued. Annual turnover growth rate retail decreased in the first quarter due to a VAT increase and slower growth wages.

The Bank of Russia expects GDP growth of 1.2–1.7% for 2019. The VAT increase had a slight dampening effect on business activity. Additional budget funds received in 2019 will be used to increase government spending, including investment ones. In subsequent years, the pace may increase economic growth as national projects are implemented.

Inflation risks. Short-term pro-inflationary risks have decreased. In terms of internal conditions, the risks of secondary effects from the VAT increase are assessed as insignificant; the risks of accelerated price increases for certain food products have decreased.

At the same time, elevated and unanchored inflation expectations, as well as external factors, remain significant risks. In particular, risks of a slowdown in global economic growth remain. Geopolitical factors may lead to increased volatility in global commodity and financial markets and affect exchange rate and inflation expectations. Supply side factors in the oil market may increase the volatility of global oil prices. At the same time, the revision of interest rate trajectories by the US Federal Reserve and central banks of other countries with developed markets in the first quarter limits the risks of sustainable capital outflow from countries with emerging markets.

The Bank of Russia’s assessment of risks associated with wage dynamics, possible changes in consumer behavior and budget expenditures, has not changed significantly. These risks remain moderate.

The Bank of Russia will make decisions on the key rate taking into account the dynamics of inflation and the economy relative to the forecast, as well as assessing risks from external conditions and reactions to them financial markets. If the situation develops in accordance with the baseline forecast, the Bank of Russia allows for the possibility of reducing the key rate in II – III quarters of 2019.

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 June 14, 2019. The time for publishing a press release on the decision of the Board of Directors of the Bank of Russia and the medium-term forecast is 13:30 Moscow time.