VTB predicts key rate hike to 23% and interest rate storm
VTB Bank expects the key rate to rise to 23% in December.
According to Dmitry Pyanov, First Deputy President and Chairman of the Management Board of VTB, the decision on the rate may remain in force for the entire 2025.
The first rate increase occurred on October 25, when it sharply rose to 21%, the TASS article emphasizes.
Pyanov noted that a high rate could cause a “storm” on the interest rate market.
He also stressed that in September the Central Bank of the Russian Federation raised the rate to a record 21% per annum. The next meeting of the regulator's board of directors will be held on December 20, 2024.
In addition, the Bank of Russia has raised its inflation forecast for 2024. Inflation is expected to be 8-8.5%. In 2025, according to the regulator's forecasts, it should decrease to 4.5-5%.
Questions and Answers (FAQ)
Question 1: What is the key rate in simple terms?
Answer: The key rate is the minimum percentage at which the Bank of Russia gives loans to banks.
Question 2: What are the risks of raising the key rate?
Answer: Raising the key rate makes loans more expensive and helps reduce inflation.
Question 3: When was the key rate lowest?
Answer: The lowest key rate was 4.25% from July 2020 to March 2021. The highest was 20% from March to April 2020.
