The Bank of Russia explained the impact of the key rate on regional inflation

The spread in inflation in the regions of Russia is decreasing as inflation decreases, the Bank of Russia influences it with the key rate, the regulator said in a message in the national messenger "Max".

“The key rate affects overall inflation in the country, and not the prices of specific goods and services in individual regions. There have always been and will be differences in inflation across regions, but as inflation decreases, the spread between them will also decrease,” the report says.

The regulator recalled that it analyzes regional trends and takes them into account when making decisions on the key rate. For example, in Crimea the current inflation is at 15%, and in Moscow it is below 4%, according to Rosstat data.

It is noted that one-time surges in prices for individual goods or services both throughout the country and in certain regions occur and can lead to a temporary acceleration of inflation. Their reasons are on the supply side of goods and services and, as a rule, are associated with some kind of force majeure. The authorities deal with them, sometimes “resolving problems manually.”

“The task of the Central Bank in such situations is to balance the dynamics of supply and demand so that individual price jumps do not turn into high inflation in the country as a whole,” the regulator said.

The Central Bank added that if we hypothetically imagine that the Bank of Russia has now suddenly sharply reduced the key rate, there will be no increase in goods, but there will be a surge in demand and prices for absolutely everything will soar.

Then no one will want to keep their savings in deposits at low rates with high inflation: everyone will try to quickly turn money into valuable goods.