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.

What is the key rate?

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.

History and predecessors of the key rate

Before 2013, the primary benchmark was the refinancing rate. Introduced in 1992 at 20% per annum, it soared to 210% between 1993 and 1996, later fluctuated between 20-50%, and peaked at 150% from May 27 to June 4, 1998. It then gradually declined. The lowest refinancing rate, 7.75%, was introduced on June 1, 2010, and remained in effect until February 28, 2011.

By the early 2010s, the refinancing rate was primarily used for calculating fines and penalties and as a minimum benchmark for interest on retail ruble deposits. Loans to banks were already being issued via other tools, primarily repo operations. Since January 1, 2016, the refinancing rate has been equated to the rate on one-week repo auctions.

The Bank of Russia first introduced a minimum interest rate on one-week repo auctions on May 20, 2003, setting it at 6.5%, which remained unchanged until February 2008, when it was raised by 0.2 percentage points. Due to the global financial crisis and ruble depreciation in 2008, the rate was increased several times: on December 1, 2008, it stood at 9.5%, and by February 10, 2009, it rose to 10.5%, followed by ruble appreciation.

In 2009-2010, the rate gradually declined. The 9.5% level returned briefly from May 14 to June 5, 2009. The record low of 5% remained in place for over six months - from June 1, 2010, to February 28, 2011. On September 14, 2012, the rate was fixed at 5.5%, and this value remained even after the repo rate was officially designated as the key rate.

Key rate records

From October 28, 2024, to June 8, 2025, the key rate reached its all-time high at 21% per annum. Since June 9, 2025, the rate has been set at 20%. Previously, the rate reached 20% only once - between February 28 and April 10, 2022. At that time, the increase was necessary to stabilize the currency market and curb runaway price growth following the start of the Russian special military operation in Ukraine.

The lowest key rate on record was 4.25% per annum, which the Central Bank maintained from July 27, 2020, to March 21, 2021, to stimulate economic activity amid the COVID-19 pandemic.

The longest period during which the rate remained unchanged was 307 days from September 19, 2022, to July 23, 2023, at a level of 7.5%.

Key rate in 2024-2025

Since mid-2023, the Bank of Russia has been tightening monetary policy in response to accelerating inflation, driven primarily by robust domestic demand outpacing the national economy’s ability to expand production of goods and services. In the first half of 2024, the key rate remained at 16%, before being raised in July to 18%, and again in September to 19%. On October 25, 2024, the rate was raised sharply to 21% per annum due to a significant inflation forecast overshoot.

At the first three meetings in 2025 - on February 14, March 21, and April 25 - the Central Bank left the rate unchanged.

On June 6, 2025, the rate was reduced to 20% per annum. The regulator explained in its press release that this decision reflected the gradual return of the Russian economy to a path of balanced growth and easing inflationary pressure.