To understand how the work of the Bank of Russia affects our lives, it is enough to follow the key rate (KB RF). In this article we will tell you what it is, what it is for, how its decrease and increase affect the mortgage interest rate.
What is the key rate?
The key rate is the percentage at which the Central Bank issues loans to commercial banks. This is the main instrument by which the Central Bank influences the financial market.
The low key rate of the Bank of Russia means that money is afghanistan mobile database cheap. Individuals and companies are more willing to take out loans, which ensures economic growth. But the low cost of money leads to the fact that there is a lot of it on the market and it depreciates faster. The ruble exchange rate is falling, and citizens' interest in foreign currency, on the contrary, is growing.
To reduce inflation, the Central Bank can raise the CU, which will increase the attractiveness of the ruble. This will stabilize the exchange rate and slow down inflation. But loans will become too expensive, and economic growth will slow down.
Thus, there is no "golden" value of the CBRF CF. The Bank of Russia is constantly balancing and trying to set the percentage that will be most favorable for the economy. Everything depends on what needs to be done at the current moment - slowing down inflation or helping business grow.
Why is a mortgage tied to the key rate?
All deposits and loans depend on the Central Bank's key rate. Commercial banks receive loans from the Central Bank, in which the interest rate is the KS. Based on these conditions, they set rates on credit products and deposits. The yield on deposits should be slightly lower than the key rate, and credit interest rates, on the contrary, should be higher. Otherwise, commercial banks will not be able to function.