Central Bank of Russia to postpone effective date of modified key rate from Mon to Wed to ease volatility in money market rates

MOSCOW. Aug 31 (Interfax) - The Central Bank of Russia plans to align the schedule of required reserve averaging periods with the schedule of the regulator's board meetings on the key rate in order to ease the volatility of money market rates, according to the draft guidelines for the unified state monetary policy for 2027-2029.

"The Central Bank of Russia has drafted amendments to the required reserve regulations to allow for more flexibility in setting the required reserve averaging periods, thus allowing for more flexible setting of required reserve averaging periods. The procedure to apply interest rates on Central Bank operations will also change. The meetings of the Central Bank's board of directors on the key rate will continue to be on Fridays. However, if the latest key rate changes, then it will come into effect on the following Wednesday, when settlements for the Central Bank's weekly auctions occur and the new required reserve averaging periods begin, rather than on Monday, as is currently the case," the Central Bank said.

The regulator intends to set rates for all monetary policy instruments in spreads to the key rate in order to implement these plans, and synchronization is planned for 2027 in order to prepare for the legal and technical launch.

"If the start dates of required reserve averaging periods and the new key rate are synchronized, then required reserve averaging strategies of banks would no longer significantly affect the level and volatility of the spread. At the same time, the new schedule for required reserve averaging periods will continue to take into account that the end of required reserve averaging periods should not fall on key tax periods and reporting dates, as well as other factors," the Central Bank said.