Read about how the Central Bank's decision to leave the key rate unchanged will affect the economy, business and citizens in the RIA Novosti article.
On December 20, 2024, following a meeting of the Board of Directors, the Bank of Russia decided to leave the key rate at 21%. Read about how this will affect the country's economic life in the RIA MO article.
How the Central Bank's decision on the key rate will affect the Russian economy and business
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"An increase in the rate would have a restraining effect on economic activity, especially in the sphere of consumer lending and mortgages. However, it could also reduce inflation expectations, strengthening the chile mobile database confidence of investors and the population in ruble instruments. At the same time, high rates will slow down the growth of investment activity, which in the long term could affect the pace of economic development," comments Eduard Lushin, Deputy Chairman of the Management Board and Head of Treasury at SDM Bank.
The deposit and credit market is searching for a new equilibrium. Until it is found, a number of participants continue to raise rates on both deposits and loans. At the same time, some borrowers have already lost their appetite for credit products with a floating rate due to the sharp growth of credit spreads, into which systemically important credit organizations began to include their margin, based on the rising cost of deposits, says the financier.
"The high key rate primarily puts pressure on companies with large debts. Companies such as Segezha, M.Video and some others are already working exclusively to pay off their debts. Many companies already have to borrow at 25-30% and even more. Some say that it is more profitable for them to put money in the bank than to invest in their projects," notes economist and financial markets expert Olga Gogaladze.
Now Russians feel the key rate through the yields on deposits and bonds, as well as interest rates on loans, she adds.
A high key rate increases the attractiveness of ruble savings products, and during surges in currency growth due to one-time factors, the population tries to sell dollars/euros/yuan/dirhams more profitably in order to transfer the funds received into ruble instruments - in recent years, many financial products have appeared on the domestic market that offer the opportunity to diversify your savings portfolio, Lushin notes.