Bank of Russia key rate decision: preparation process and communication

Bank of Russia key rate decision: preparation process and communication

Key rate is the principal monetary policy instrument of the Bank of Russia. The Bank of Russia takes decisions on the level of the key rate in order to achieve its monetary policy objective, i.e., to keep annual inflation around 4%.

The Bank of Russia Board of Directors takes key rate decisions eight times a year: at four quarterly pivotal meetings and four intermediate meetings that are held in-between. After each meeting, the Bank of Russia publishes a key rate press release. After each pivotal meeting, the Monetary Policy Report is published in addition to the press release and the BoR Governor holds a press conference, comments on the decision, and answers reporters’ questions.

Each key rate meeting of the Board of Directors is preceded by a long document preparation process.

The key rate decision is based on macroeconomic forecasts. Therefore, the process of the preparation and revision of the Bank of Russia’s forecast and related analytical materials is called ‘a joint forecasting round’. The round unites analysts and experts from various departments and regional branches of the Bank of Russia comprising the Bank of Russia expert team. Experts’ work within the forecasting round is coordinated by the BoR Monetary Policy Department. The Bank of Russia’s key rate decision is based on the thorough analysis of the up-to-date information and the forecast of the principal economic indicators. The wide range of the joint forecasting round participants ensures a comprehensive viewpoint on the current Russian and global economic situation and potential options for its development.

Below, we describe the main stages of the preparation for the key rate decision and provide clarifications of the decision in the follow-up to the Board of Director’s meeting.

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