What is a key rate and what does it affect
Miscellaneous / / August 25, 2021
This parameter is reflected not only in banks, but also in ordinary people.
The news periodically pops up that the Central Bank (Central Bank) either lowers the key rate, then increases it. The messages sound unsettling because what is clearly happening is about money. But it is not clear how exactly the changes affect us. Let's figure it out.
What is the key rate and why is it changed?
The key rate is the percentage at which the Central Bank lends money to commercial banks. And also the maximum rate at which they place funds on the deposits of the Central Bank. Eight meetings of the Board of Directors of the Bank of Russia are held annually, at which they decide to change the key rate or keep it at the same level. The schedule is known in advance, it is publishedKey rate decision calendar on the website of the Central Bank.
By changing the key rate, the Central Bank can maintain the target inflation rate - now it is about 4%. In this case, prices rise at a more planned pace, and people and businesses feel a little calmer. If
inflation is growing, the Central Bank is raising the rate. This somewhat slows down business processes, but along with them - and the rise in prices. The opposite is also possible: the economy is slowing down. Then the key rate is reduced, credit money becomes cheaper, which spurs business.The key rate has reached a historic lowKey rate of the Bank of Russia July 24, 2020 - it was lowered to 4.25% and raised only on March 19, 2021 - by 0.25%. The maximum was 17%. On December 16, 2014, it was immediately raised by 6.5%On the key rate of the Bank of Russia and other measures of the Bank of Russia due to the sharp strengthening of the dollar. This was done so that banks could not take out cheap loans for purchases foreign exchange and stimulate further weakening of the ruble.
How the key rate differs from the refinancing rate
Initially, the refinancing rate depended on the interest at which the Central Bank would issue credits commercial banks. She appeared"Telegram" of the Bank of Russia dated December 29, 1991 No. 216-91
However, from January 1, 2016, the refinancing rate isBank of Russia Ordinance No. 3894-U dated December 11, 2015 "On the Bank of Russia refinancing rate and the key rate of the Bank of Russia" key and follows it. Now the latter is the main instrument of monetary policy. But the refinancing rate continues to exist. Moreover, various important calculations are legally associated with it. For example, it is usedTax Code of the Russian Federation Article 75. Penalty for calculating interest and fines.
What does the key rate affect?
The change in the key rate determines the things that are important to us.
Interest rates on deposits and deposits for bank customers
They follow the key rate. If it rises, loans from the Central Bank become more expensive for banks. And they raise interest rates on loans. Key rate goes downInterest rates and turnover structure for loans provided in rubles - percentages also fall. Naturally, this is not the only factor, but the overall trend will be visible.
Similarly happensInterest rates and turnover structure for deposits (deposits) in rubles with deposits. The lower the interest on loans, the more reluctant banks are to share part of the diminished profits with clients who deposit money with them. Conversely: rates on deposits (including savings accounts) are growing following the credit ones. With the difference that banks raise interest on deposits less willingly than on loans.
Financial activity and prices
It seems that interest rates on deposits and loans are important to those who use them. But this is not at all the case. For starters: not only citizens take loans. This is primarily a business. The more expensive the loans, the more expensive and risky the production. The cheaper the loans, the more actively the business develops. New companies are established. And lower borrowing rates for citizens provokes consumption. At the same time, prices may rise due to increased demand. For example, in 2020 mortgage rates decreased significantly. After which the property startedAverage prices in the housing market so briskly rise in value that it neutralized all the benefits of lower interest overpayment.
At the same time, low deposit rates make people wonder whether it is worth taking money to the bank or considering alternatives with higher returns. Which could be a great opportunity for companies or the government to raise money through bonds or other stock market instruments at a lower interest rate than before.
But loans at a higher interest force people to slow down and shop with more caution. Therefore, the business is forced to offer favorable prices or at least slow down their growth in order to stimulate customers. At the same time, the rates on deposits are growing, and people are more willing to bring money to the bank for safekeeping.
Compensations, penalties, fines
The key rate, and in some cases an equal refinancing rate, is used to calculate important amounts. For example:
- Compensation for delayed wages - from 1/150Labor Code of the Russian Federation Article 236. Liability of the employer for delay in payment of wages and other payments due to the employee the key rate for each day of delay.
- Late tax penalties - they are chargedTax Code of the Russian Federation Article 75. Penalty as a percentage of the amount owed. The size is equal to 1/300 of the refinancing rate for individuals, for legal entities - 1/300 in the first 30 days, and then - 1/150.
- Penalty for late payment for housing and communal services - 1/300RF Housing Code Article 155. Payment for housing and utilities refinancing rates for each day of delay, starting from the 31st day after the settlement date. From the 91st day you will have to pay more - 1/130 of the refinancing rate.
- The amount of income on deposits for individuals, which is not taxed. You need to pay personal income tax from an amount that exceeds the key rate multiplied by one million rubles.
Accordingly, the total figures may become higher or lower due to changes in the key rate. Consider the tax on income from deposits. It will have to be paid already in 2022 - for 2021. On January 1, the key rate was 4.25%. Hence taxed is not a subject to a tax 42.5 thousand rubles. From the amount exceeding this indicator, you will have to pay 13%. If the key rate were 6%, the limit would already be equal to 60 thousand.
What is worth remembering
- The key rate is the Central Bank's monetary policy instrument. Its change affects the economy as a whole.
- Commercial banks' rates on loans and deposits follow the key rate. The percentages decrease after a decrease, and rise with an increase.
- The refinancing rate is equal to the key rate. Together, they affect the size of the different settlements on the part of the state.
- A decrease in the key rate stimulates the development of the economy, while an increase slows it down.
- But the economy is influenced not only by the key rate, so it is still not worth focusing solely on it.
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I am writing for Lifehacker about money, law and rights, things that help to live easier, better and more fun. And, of course, I check the advice myself: I get tax deductions, I file tax returns online, and I paid off my mortgage ahead of schedule and forced the mail to find my package.
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