Began the cycle of increasing the key rate of the Central Bank, how does an investor belong to this?

Evgeny, began a cycle of increasing the key rate of the Central Bank, how do you feel about this?

Yes, indeed, on June 11, 2021, the Central Bank decided to raise the key rate once again. This time it increased 50 base points and reached 5.5% per annum. Before that, she rose on April 23, 2021 and in the first from 2014. It was raised immediately by 0.5% to 5%.

Key bet — the main instrument of monetary policy Central Bank

How does this happen?

Commercial banks take money from the Central Bank, add their march and give loans to the population, business, enterprises.

But with economic growth and high demand

The higher the bet that commercial banks took money in the Central Bank, the more expensive loans for us. When loans are more expensive, we take them less, the consumption of goods and services is reduced, inflation slows down.

The decline in interest rates in 2020 caused a rapid flight of the population. But now the situation should start changing. Although there is always a delay in time to the economy between the change in the key rate and its impact on the economy.

To be consistent, the Central Bank operates within the framework of cycles. Each cycle can last 1 year to several years. Cycles can be divided into:

1️⃣ mild monetary policy;

2️⃣ neutral DKP;

3️⃣ rigid DKP;

We are now moving from soft to neutral DKP.

According to the Central Bank, the next increase in the rate immediately occurred by 0.5% due to the sharp jump in inflation. So what is it now to do an ordinary person?

If you have long wanted to refinance your credit or mortgage, then you need to do it now. It is possible that in the next few years we will no longer see such low rates.

And what to do an investor now?

Do not buy bonds, especially «long» with a maturity of 2023.

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