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Core inflation

An indicator of inflation characterising its most sustainable part. Core inflation is measured based on the core consumer price index (CCPI). The difference between the CCPI and the consumer price index (CPI) is that the CCPI is calculated excluding changes in prices for certain products and services that are subject to the influence of administrative and seasonal factors (individual categories of fruit and vegetables, passenger transportation services, communication services, utility services, motor fuel, etc.).

Share of foreign currency in bank deposits (loans)

The share of foreign currency-denominated deposits (loans) in the banking sector’s overall portfolio of deposits (loans).

Monetary base

The total amount of components of cash and credit institutions’ funds in accounts and Bank of Russia bonds denominated in Russian rubles. In the narrow sense of the term, the monetary base comprises cash in circulation (outside the Bank of Russia) and credit institutions’ funds in the accounts of required reserves for ruble-denominated funds raised by credit institutions. The broad monetary base includes cash in circulation (outside the Bank of Russia) and credit institutions’ total funds in accounts and Bank of Russia bonds.

Money supply

The total amount of funds of residents of the Russian Federation (excluding general government and credit institutions). For the purposes of economic analysis, various monetary aggregates are calculated (М0, М1, and М2).

Money supply in the national definition (monetary aggregate M2)

The total amount of cash in circulation outside the banking system and of the balances of Russian residents (non-financial and financial (other than credit) institutions and individuals) in settlement, current and other demand accounts (including in bank card accounts), time deposits, and other raised term funds in the banking system denominated in Russian rubles, as well as interest accrued on them.

Consumer price index (CPI)

The ratio of the value of a fixed set of goods and services in current-period prices to its value in previous (reference) period prices. This index is calculated by the Federal State Statistics Service. The CPI reflects changes over time in the overall level of prices for goods and services purchased by households for private consumption. The CPI is calculated based on data on the actual structure of consumer spending and is, therefore, the principal indicator of the cost of living. In addition, the CPI has a range of characteristics making it convenient for common use, namely a simple and clear method of construction, a monthly frequency of calculation, and timely publication.

MSCI indices

A group of indices calculated by Morgan Stanley Capital International. The latter calculates indices for individual countries (including Russia), global indices (for various regions, developed and emerging market economies), and the World Index.

Inflation expectations

Economic agents’ expectations regarding price growth in the future. Inflation expectations are formed by businesses, households, financial markets, and analysts. Economic agents make economic decisions and their plans for the future (including those related to consumption, saving, borrowing, investment, and loan and deposit rates) relying on their expectations. Inflation expectations impact inflation and are, therefore, a critical indicator for making monetary policy decisions.


A sustained rise in the overall level of goods and service prices in the economy. Inflation is generally associated with changes over time in the price of the consumer basket, that is, a set of food products, non-food goods and services consumed by an average household (see also the article ‘Consumer Price Index (CPI)’).

Bank of Russia key rate

The principal instrument of the Bank of Russia’s monetary policy. The key rate is set by the Bank of Russia Board of Directors eight times a year. Changes in the key rate influence credit and economic activity and, ultimately, help achieve the key goal of monetary policy. The rate corresponds to the minimum interest rate at the Bank of Russia’s one-week repo auctions and to the maximum interest rate at the Bank of Russia’s one-week deposit auctions.

Credit default swap (CDS)

A financial instrument enabling a buyer to insure against a certain credit event (e.g., default) concerning a third party’s financial obligations in exchange for regular payments of premia (CDS spread) to the CDS seller. The higher the premium paid, the more risky are the obligations that are the subject of the credit default swap.

Banking sector liquidity

Credit institutions’ ruble-denominated funds held in correspondent accounts with the Bank of Russia primarily for making payments via the Bank of Russia’s payment system and for complying with the mandatory reserve requirements.

Neutral rate of interest

The level of the key rate when monetary policy neither slows down, nor speeds up inflation.

Required reserve ratios

Ratios that may range from 0% to 20% and that are applied to credit institutions’ reservable liabilities to calculate the regulatory value of required reserves. These ratios are established by the Bank of Russia Board of Directors.

Liquidity-absorbing operations

Reverse operations carried out by the Bank of Russia to absorb liquidity from credit institutions. These are operations either to raise deposits or place Bank of Russia bonds.

Refinancing operations

Reverse operations conducted by the Bank of Russia to provide liquidity to credit institutions. They may be in the form of loans, repos or FX swaps.

Russia’s balance of payments

A statistical system reflecting all economic operations between residents and non-residents of the Russian Federation over the course of the reporting period.

Floating exchange rate regime

An exchange rate regime where the central bank establishes no targets, including operational ones, whether for the level of or for changes in the exchange rate, with the exchange rate forming under the influence of market factors. However, the central bank reserves the right to purchase foreign currency in order to replenish international reserves or to sell it in the case of any threats to financial stability.

RUONIA (Ruble OverNight Index Average)

A reference weighted interest rate on overnight ruble-denominated deposits in the Russian interbank market. It reflects the estimated cost of the unsecured borrowings of banks with minimum credit risk. The Bank of Russia calculates RUONIA using the method developed by the National Finance Association together with the Bank of Russia, based on information on deposit transactions between the RUONIA panel banks. The list of the panel of banks participating in the RUONIA calculation is formed by the National Finance Association and agreed upon with the Bank of Russia.

Structural liquidity deficit / surplus of the banking sector

A structural deficit in the banking sector is a situation when credit institutions demonstrate sustainable demand for liquidity from the Bank of Russia. A structural surplus is when credit institutions have a stable excess of liquidity and the Bank of Russia needs to carry out liquidity-absorbing operations. The estimated level of a structural liquidity deficit / surplus is the difference between the outstanding amount on refinancing operations and the amount of liquidity-absorbing operations of the Bank of Russia.

Inflation targeting

A strategy of monetary policy based on the following principles: price stability is the key goal of monetary policy; the inflation target is clearly specified and announced; under a floating exchange rate regime, monetary policy influences the economy primarily through interest rates; monetary policy decisions are made based on the analysis of a wide range of macroeconomic indicators and their forecasts; the Bank of Russia seeks to provide clear benchmarks for households and businesses, including through enhancing information transparency.

Transmission mechanism

The mechanism through which monetary policy decisions impact the economy in general and price dynamics in particular; the process of the gradual transmission of the central bank’s signal regarding the maintenance of or a change in the key rate and its future path from financial market segments to the real sector of the economy and, ultimately, to the inflation rate. A change in the key rate is translated into the economy through multiple channels (interest rates, credit, foreign exchange rates, balance sheet, inflation expectations, etc.).

Financial stability

A state of the financial system involving no systemic risks which, in the case of their materialisation, might adversely affect the transformation of savings into investment and the real economy. Financial stability improves the resilience of the economy to external shocks.

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Last updated on: 20/03/2020