The Bank of Russia has left the Majority of Interest Iates Unchanged

On December 10 the Bank of Russia announced that it has remained unchanged the refinancing rate and most interest rates on of its major operations.


At the same time, from December 11, changes are introduced to "currency swap" operations: interest rate of the ruble operations is reduced from 6.75% to 6.5% per annum. Simultaneously, interest rate on deposits with the Bank of Russia on fixed terms is increased by 0.25 p.p., now it is set at 4.5% per annum.

In our view, the Central Bank made changes aimed primarily at improving the effectiveness of its interest rate policy by restricting the rates corridor through which the Bank of Russia influences the financial markets. Recall, that in the periods of excessive liquidity an important role in the interest rates formation at the interbank market play the interest rates of deposits with the RF Central Bank, and in the periods of liquidity shortage - the refinancing rates of the Central Bank on liquidity provided to the banks (including those of "currency swap" operations). Gradual reduction of the spread between the rates on providing and absorbing liquidity allows the Bank of Russia to manage market interest rates more effectively.

P.V. Trunin, Ph.D. in Economics, Head of Monetary Policy Department