Monetary policy is a part of state economic policy aimed at improving Russian citizens’ welfare. Its priority is to ensure price stability, that is, sustainably low inflation.
The Bank of Russia maintains inflation close to the target of 4%. Such a policy is called inflation targeting. The main instrument of monetary policy is the key rate. The key rate is the interest rate on loans extended to commercial banks by the central bank and on deposits it accepts from them. A change in the key rate impacts demand through interest rates in the economy and, ultimately, inflation. In making its decisions, the central bank relies on the macroeconomic forecast and factors in the situation in the economy and financial markets.
The Bank of Russia extensively explains the reasons behind and the expected results of its decisions on monetary policy. The understanding of and confidence in the measures being implemented are critical for enhancing their efficiency.