Monetary Policy Guidelines for 2020–2022

Monetary Policy Guidelines for 2020-2022

Principles and goals

The main goal of monetary policy is to support price stability, that is, sustainably low inflation. Low inflation ensures a stable purchasing power of the national currency. Price stability is an important element of an environment that is favourable for living and doing business. Our goal is to hold inflation close to 4%.

Our principles

Setting a permanent public inflation target

Key rate and communication as monetary policy instruments

Monetary policy decision-making based on the macroeconomic forecast


Annual inflation 
Annual GDP growth 
Annual lending growth 
Oil price, average for the year 
2018 (fact) 2019 2020 2021 2022
4,3% 3,2–3,7% 3,5-4,0% 4% 4%
2,3% 0,8–1,3% 1,5–2,0% 1,5–2,5% 2–3%
11,5% 8–12% 7–12% 7–12% 7–12%
$69,8 $63 $55 $50 $50
Monetary policy in 2018 H2–2019

Proactive key rate increases in September and December 2018

Ruble depreciation and the VAT rise increased proinflationary risks, which in turn entailed growth of inflation expectations. In this context, the Bank of Russia raised the key rate by 0.5 pp overall (a total of two 0.25 pp hikes).

Keeping the key rate unchanged in January–April 2019

In March, annual inflation passed its 5.3% peak (below the Bank of Russia’s expectations). The price response to the VAT rise was moderate. Inflationary pressure was limited owing to the moderate dynamics of consumer demand and the improved external environment. As a result, inflation started to slow down.

Key rate cuts in June–October 2019

The price dynamics and the overall economic environment in May–October 2019 suggested that the key rate might be reduced. Inflation was decelerating. Economic activity in 2019 H1 was below expectations. In this context, the Bank of Russia decreased the key rate by a total of 0.75 pp in June, July, September and October

Monetary policy instruments

The operational objective of the Bank of Russia’s monetary policy is to keep overnight interbank rates close to the Bank of Russia key rate. In 2019, this objective has been achieved.

In the conditions of the persisting liquidity surplus in 2019, one-week deposit auctions have been the main instruments. The Bank of Russia has also extensively issued its coupon bonds to absorb a stable portion of excess liquidity for longer periods.