Rate – 15%: what will happen to the economy, banking products and investments

On October 27, the Board of Directors of the Central Bank raised the key rate by 2 percentage points to 15%, although almost all analysts surveyed by Vedomosti predicted an increase to 14%. This is the fourth rate increase in a row since the summer of 2023, when the regulator began a cycle of tightening monetary policy (MPT) to achieve the inflation target of 4% in 2024.

Inflationary pressure has increased significantly and is exceeding the expectations of the Bank of Russia. The increase in domestic demand is steady and increasingly exceeds the capacity to expand the production of goods and services, the rate of credit growth remains high, and the decline in fiscal stimulus in the coming years will occur more slowly than previously expected, the Central Bank writes in its rate release.

“Just as Waterloo determined the fate of Europe, this meeting will largely determine the development of both the financial and banking markets in the rest of 2023 and, above all, in 2024,” said Dmitry Pyanov, first deputy chairman of the VTB board, on the eve of the meeting.