Russia Monetary Policy


Central Bank raises reserve requirements

On 31 January, the Central Bank decided to leave the refinancing rate unchanged at the historic low of 7.75% for a seventh consecutive month. The Central Bank also left unchanged the overnight deposit rate, which it had hiked by 25 basis points at the previous meeting on 24 December. The Bank's decision surprised market analysts, who had expected Russian monetary authorities to raise either the refinancing or deposit rate. Russian monetary authorities instead decided to raise the reserve requirement ratio (RRR) on banks' deposits. In particular, the RRR on deposits of corporate non-residents was raised by 100 basis points to 3.5% from 2.5%, while the RRR on all other types of deposits was raised by 50 basis points to 3.0% from 2.5%. The measures came into effect on 1 February. Russian authorities believe that the current policy stance will help fight rising inflation, fanned by escalating food prices, while avoiding to fuel capital inflows, thus leading to an unwanted appreciation of the rouble.

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