TASS-FACTBOX. On July 25, 2025, the Bank of Russia’s Board of Directors will hold its fifth meeting of the year to address the key interest rate. TASS has prepared an in-depth report on this benchmark, which has stood at 20% per annum since June 9, 2025.
The key rate is the annual interest rate at which the Bank of Russia lends funds to commercial banks. By decision of the Bank of Russia’s Board of Directors on September 13, 2013, the key rate was defined as the interest rate on one-week repo auctions. All other Bank of Russia operations are tied to this benchmark rate. Since commercial banks depend on loans from the central bank, the key rate significantly impacts their clients - both individuals and businesses. The lower the key rate, the lower the interest rates on mortgages and other types of loans.
The Bank of Russia may raise the key rate to prevent a market crash and to smooth out volatility in financial markets. At low key rates, banks can borrow rubles from the central bank, convert them into foreign currency, and profit from ruble depreciation - offsetting expenses, including interest payments on ruble-denominated loans. When the rate increases, such speculative activity becomes riskier for banks. However, raising the rate also results in higher borrowing costs for businesses and consumers. Banks may face difficulties refinancing existing loans, which can slow economic growth. Thus, the central bank must strike a careful balance through its interest rate policy, preserving the ruble’s stability, supporting the real economy’s demand for affordable loans, and managing inflation, which can either accelerate or slow down depending on prevailing macroeconomic conditions.
