The head of the Central Bank, Elvira Nabiullina, said that the regulator will raise the key rate until the Russians understand that deposit rates compensate them for inflation.

She believes that in order to cope with inflation, it is necessary to removerhang of excess demand that creates inflationary pressure. This can be done by increasing the attractiveness of deposits.

“That is, there should be higher interest rates on deposits, so that even if people expect high inflation, they understand that these deposit rates will not eat up the purchasing power of their savings,” Nabiullina said on the website of the Bank of Russia.

According to her, deposits are one of the key channels through which monetary policy affects the economy.

“That is why we are now raising the key rate and will continue to do so until people feel, as they did several years ago, that deposit rates fully compensate them for inflationary risks,” the head of the Central Bank concluded.

Earlier it was reported that the Central Bank raised the key rate by 1 percentage point to 9.5% per annum. This is the eighth increase in the key rate in a row. The last one was on December 17, 2021, when the Central Bank also increased the rate by 1 p.p. up to 8.5% per annum. The Bank of Russia explained its decision by the fact that inflation is growing above forecasts, while inflation expectations of the population are not decreasing yet.

bbabo.Net