Bank of Russia increases key rate by 10.5 pp to 20%

External conditions for the Russian economy have drastically changed, the regulator noted

The board of directors of the Bank of Russia has decided to increase the key rate by 10.5 percentage points to 20% per annum starting February 28. This will support the financial and price stability and protect the savings of citizens from depreciation, the regulator said in a statement on Monday, Qazet.az reports.

This is an all-time high of the key rate. The previous record of 17% was hit in December 2014.

"The Bank of Russia Board of Directors decided to increase the key rate to 20% per annum from 28 February 2022. External conditions for the Russian economy have drastically changed. The increase of the key rate will ensure a rise in deposit rates to levels needed to compensate for the increased depreciation and inflation risks. This is needed to support financial and price stability and protect the savings of citizens from depreciation," the statement said.

Further key rate decisions will be made taking into account risks posed by external and domestic conditions and the reaction of financial markets, as well as actual and expected inflation movements relative to the target and economic developments over forecast period, the Bank of Russia said.

A statement by the Governor of the Bank of Russia in follow-up to the Board of Directors meeting is expected to be delivered on February 28, 2022 at 4:00 pm Moscow time.