Analysis of the key interest rate impact on inflation

In order to achieve the goal of the Central Bank — ensuring the stability of the national currency, the Bank of Russia introduced the inflation targeting. The key interest rate becomes the main instrument of inflation targeting. The article deals with the mechanism of the key rate impact on inflation, the reaction of the banking system to the key rate increase in order to contain inflation processes. The most expected reaction of the market is a change in the direction of increasing interest rates on Bank deposits and the narrowing, due to the increase in loan interest, the volume of loans granted. The consequences of the decision of September 14 to raise the key rate to 7.5% immediately affected Deposit rates in the direction of their increase. The change in interest rates on loan operations, as well as the appeal for refinancing to the Central Bank shows an ambiguous trend. The Central Bank will assess the feasibility of further increase in the key rate, taking into account the dynamics of inflation and the economy relative to the forecast, as well as taking into account the risks from the external environment and the reaction of financial markets to them. Particular attention is paid to the increasing role of non-monetary inflation factors. From the conducted research the necessity of application of monetary methods in a complex with instruments of non-monetary policy becomes obvious.