The Bank of Russia has kept the key rate unchanged for the fourth time in a row

Russia has been living with a key rate of 21% for six months now. Since the summer of 2023, the Central Bank of the Russian Federation has been constantly raising this indicator and brought it from the initial 7.5% to the current level by October last year, after which the tightening of monetary policy was paused.

At the last meeting of the regulator's Board of Directors in March, the market was given a moderately tough signal. However, the April decision of the Bank of Russia proves that it is not worth counting on a reduction in the "key" yet. MK found out from experts what this means for the ruble exchange rate, loans, deposits and wallets of Russians.

Vladislav Antonov, financial analyst at BitRiver:

"There are compelling reasons to keep the rate at 21%. The March annual inflation of 10.34% exceeds the February figure of 10.06%, which indicates persistent inflationary pressure in the economy.

When making its decision, the Central Bank of the Russian Federation was guided primarily by price dynamics and inflation expectations. And the latter rose to 13.1% in April. High expectations create a self-sustaining effect, when the population and business adjust prices and financial behavior in advance based on the expected price growth. The regulator seeks to "anchor" these expectations through a tight monetary policy.

The ruble exchange rate also remains an important factor, but its influence is limited due to the lack of a full-fledged currency market after the introduction of sanctions against the Moscow Exchange. Now the rate is determined to a greater extent by the balance between the operations of exporters and importers than by the monetary policy of the Central Bank of the Russian Federation. Considering that the dollar exchange rate fell to 81 rubles, the regulator will certainly take this into account. The strengthening of the ruble is a temporary containment of inflation.

The geopolitical situation and sanctions pressure create additional risks for the Russian economy. Oil prices and the situation with global trade conflicts are of secondary importance in the current conditions, but are also in the regulator's field of vision as factors influencing inflation in the medium and long term.

It is worth noting the structural imbalances of the Russian economy: labor shortage, rising wages and high consumer demand with limited supply. These factors create additional inflationary pressure, which the Central Bank is forced to take into account when determining the key rate.

Under these conditions, keeping the rate at 21% appears to be the most balanced solution, allowing tight monetary conditions to be maintained to achieve the target inflation rate of 4% by 2026, without creating additional pressure on economic activity by raising the rate.”

Arthur Meinhard, Head of Global Markets Research:

"The current key rate seems quite sufficient for the Bank of Russia to gradually achieve the inflation target of 4% per annum. However, this may require a fairly long period of maintaining it at this level. Let me remind you that at the end of April it will have been six months since the Central Bank of the Russian Federation changed it. For comparison: it took the US Federal Reserve just over a year to be convinced of the sustainability of the trend towards lower inflation and to begin easing its monetary policy. Of course, the reasons for the price growth in the two countries are different, but this comparison makes it clear that the key rate, in principle, slows down the economy quite slowly.

Theoretically, it is believed that between the increase of the key rate and its full impact on economic processes, 3-6 months pass. About the same amount of time is required for the Central Bank to be convinced of the sustainability of the trend. Thus, I would not expect a decrease in the key rate in Russia in the spring: in April, the Central Bank of the Russian Federation left it unchanged, and in May, there will be no scheduled meeting of the board of directors. However, in the summer, there may be intrigue in the form of a possible easing of the regulator's policy."

Natalia Pyryeva, leading analyst at Tsifra Broker:

"The regulator kept the rate at 21%, as there is still some balance in pro-inflationary and disinflationary risks. At the moment, the economic situation is still ambiguous. On the one hand, there is a normalization of lending, a slowdown in the growth rate of consumer prices and a decrease in inflation expectations of the population and business, which seems to open the possibility of considering a rate cut. However, we believe that there is not enough data yet to confidently state the stability of the disinflationary trend.

In particular, the ruble strengthening factor at the beginning of the year is one of the reasons for the slowdown in consumer price growth, but the ruble's return to a weakening trajectory, which we expect in the second half of 2025, may partly offset the current signs of inflation cooling. At the same time, the budget impulse is maintained against the background of increased government spending with weak income growth rates due to problems with exports due to negative dynamics in the oil market due to the uncertainty of the global economic development.

It is also important for the Bank of Russia not to "overstay" high rates, it is important to "cool down" the overheated economy, but not to put it into recession. At the moment, we do not see significant risks to the economy due to high rates, with the exception of the real estate sector.

If the domestic currency rate remains within our forecasts, at 95 rubles per US dollar by the end of the second quarter, there will be no grounds for raising the regulator's rate. On the contrary, there will be grounds for lowering the rate in order to maintain economic growth. We predict that the key rate may be lowered by 2% at the June meeting - to 19%.

High rates are positive for the ruble, as they increase the attractiveness of ruble savings. But in general, high rates in the economy are negative, as tough monetary conditions worsen opportunities for business development. Thus, it is becoming more and more expensive for companies to service current debts, and, even more so, to open new credit lines."

Natalia Milchakova, leading analyst at Freedom Finance Global:

"Inflation gradually began to slow down in March, although in annual terms it is not as noticeable as in monthly terms. Rosstat even recorded not only a slowdown in growth in March, but even a decrease in prices for some food products, such as chicken eggs. The strengthening of the ruble and the expectation of an influx of goods from China to Russia due to the increase in duties on Chinese goods in the United States may affect the slowdown in growth and even a decrease in prices for some types of imported goods, and this should also contribute to a slowdown in inflation. Nevertheless, according to the results of March, annual inflation in Russia rose to 10.3% - this is a high level, and therefore, in our opinion, the long-awaited decision of the Central Bank of the Russian Federation to reduce the key rate is still a long way off.

The impact of the Central Bank of the Russian Federation's decision on the ruble exchange rate is often paradoxical, most likely because if the regulator's decision coincides with market expectations, then the ruble reacts to other factors: for example, to the signal to the market in the regulator's accompanying comments.

We confirm our forecast that, under an optimistic scenario of developments outside and within the country, Russia could end 2025 with a key rate of 19-19.5% per annum.

Keeping the key rate unchanged should not have a significant impact on interest rates on loans and deposits, although the largest banks are already showing a tendency to gradually reduce interest rates on deposits, and some banks have even begun to gradually reduce interest rates on commercial mortgages. And after the April decision of the Central Bank of the Russian Federation, this trend may intensify. Keeping the key rate has already cooled the credit market; at least, mortgages issued by banks in the first quarter of 2025 decreased by 40-44% year-on-year, according to various estimates. This means that the key rate is gradually influencing the slowdown in inflation."