? By the behavior of inflation greece telegram data itself. Inflation will become low if and only if the gap between demand and production capacity—or, as economists call it, the output gap—disappears.
— First, tell us how the rate allows the Central Bank to combat accelerating inflation?
— By changing the key rate and giving a guideline for how it may change in the future, the Bank of Russia influences all interest rates in the economy. Rates for different terms, for different borrowers, for different depositors, of course, differ from the key rate, because they are determined by financial markets. But the “key” significantly influences everything.
The higher the interest rates in the economy
– on deposits, on loans, on bonds – the stronger the motivation to direct additional income to savings and, conversely, the less desire to take out loans. Accordingly, a higher level of rates allows demand to be more moderate. And to more quickly eliminate the very output gap, which is the main reason for accelerating inflation.
The way, in the conditions
of an economic downturn, as it was, for example, at the peak of the pandemic in 2020, we, on the contrary, reduced the rate down to 4.25%. This was necessary creating a memorable customer journey to avoid the risk of deflation, support demand, which had fallen sharply at that time, and accelerate the economic recovery. And the ao lists rapid reduction of the key rate in the summer of 2022 to 7.50% accelerated the recovery of GDP after the external shock of the spring of that year.