An increase follows: banks expect a further increase in the key rate in June

In June, the financial market expects another increase in the key rate, follows from the consensus forecast of Izvestia. With a high degree of probability it will be increased by 0.25 percentage points, to 5.25%. This is indicated by accelerating price growth, as well as a steady economic recovery, explained experts from the largest banks. By the end of the year, the main indicator of the Central Bank will be fixed at the upper limit of the neutral range - 5.5–6%. Deposits will become more profitable, however, loans will also become more expensive, analysts stated.

Percentage approach: the market has included a key increase of up to 5% in its rates

The Central Bank made a choice in favor of slowing price growth instead of supporting economic recovery, experts say

Past meetings of Central Banks:

• December 18: Bank of Russia key rate: no surprises
• December 16: Powell: Fed could make monetary policy even looser at any time
• December 10: The pandemic is coming – the ECB takes decisive steps
• 25.11.2020: FOMC minutes: risks to the economy remain high

The impact of changes in the Central Bank key rate for Forex currency pairs

From the standpoint of fundamental analysis, any hint in the official press release of the Central Bank to

• an increase in the key interest rate causes a bullish trend to strengthen this currency on Forex and its currency futures on the Chicago Mercantile Exchange (CME), and CFDs from Forex brokers;
• a decrease in the key interest rate provokes the opposite situation - a decrease in the quotations of a given currency.

Next meetings of Central Banks

• Bank of Russia,
• Fed,
• ECB,
• Bank of England,
• Bank of Japan,
• Bank of Switzerland,
• Bank of Canada,
• Bank of Australia (RBA),
• Reserve Bank of New Zealand (RBNZ).

Traders, speculators, investors and financiers are waiting for reports from meetings of the central banks of major countries. The level of interest rates determines the further dynamics of many areas of the country’s economic activity, as well as the interest of investors in the national currency and government securities. On this page you will find a calendar of meetings of Central Banks for 2021, as well as schedules for publishing reports on them.

Central banks are banks of banks

Central banks regulate their member banks by requiring sufficient reserves to cover potential loan losses. They are responsible for ensuring financial stability and protecting depositors' funds. Also, central banks serve as a bank for private banks and the government of the country. This means they process checks and provide money to their members.

The central bank stores currency in its foreign exchange reserves. This allows it to influence exchange rates by adding a currency, usually the US dollar or euro, to support its own currency in settlement. This link helps exporters keep their prices competitive. Central banks also control inflation by managing exchange rates. Most central banks regularly maintain economic statistics to guide tax policy decisions.

Meetings of the Bank of Russia in 2021

Meetings of the Central Bank of Russia are held 8 times a year with the publication of a report on the country's monetary policy once a quarter. The Bank of Russia is quite actively involved in setting the ruble exchange rate, so interest rates can be changed not only during the next meeting of the Central Bank of the Russian Federation, but also on any other working day. Since the level of the key rate is quite high, changes occur almost every meeting, especially in times of crisis.

>> Current interest rate of the Bank of Russia

February 7 (decision on the key rate, report on monetary policy and press conference) ; ——————————————————————————————————————————— March 20 (decision on the key rate ) ; ——————————————————————————————————————————— April 24 (decision on the key rate , monetary policy report and press conference) ; ———————————————————————————————————————————— June 19 (decision on the key rate ) ; ———————————————————————————————————————————— July 24 (decision on the key rate , monetary policy report and press conference) ; ———————————————————————————————————————————— September 18 (decision on the key rate ) ; ———————————————————————————————————————————— October 23 (decision on the key rate , monetary policy report and press conference) ; ——————————————————————————————————————————— December 18 (decision on the key rate ) . ———————————————————————————————————————————

All things grows

At the meeting of the board of directors of the Central Bank, which will be held on June 11, 12 out of 14 experts from the largest Russian banks interviewed by Izvestia spoke in favor of increasing the key rate. Two more believe that at the beginning of summer the Bank of Russia will take a pause and keep the indicator at 5%, since in April there was too sharp an increase - by 0.5 percentage points at once.

At the same time, opinions regarding the increase step differ. Increase in the regulator rate by 0.25 percentage points. seven of 14 analysts expect. Three of them named a possible acceptable range from 0.25 to 0.5 percentage points, noting that the choice will depend on inflationary and geopolitical factors. Another key jump by 0.5 percentage points, to 5.5%, was predicted by two experts.

Promotion follows

Photo: IZVESTIA/Dmitry Korotaev

Cash account: The Central Bank expects a reduction in cash in circulation in 2021

The volume of paper money in hand may decrease by 2 trillion rubles, experts estimate

The regulator’s decisive rhetoric in April is explained by the rapid growth of inflation with a steady recovery in demand after the lifting of coronavirus restrictions, explained the head of SberCIB Investment Research Yaroslav Lisovolik. He emphasized that the main signal from the Bank of Russia remained virtually unchanged: the regulator said that it would assess the feasibility of further increasing the key rate at its upcoming meetings. Typically, this phrase indicates a high probability of tightening monetary policy, the expert noted.

The Central Bank raised its forecast for price growth at the end of 2021 by 1 percentage point. - up to 4.7–5.2%, recalled PSB chief analyst Denis Popov. He added that April studies again showed a significant jump in the population’s inflation expectations: in the entire history of monthly observations, only in December 2014 their increase was greater than this spring. Short-term business price expectations—for three months in advance—also increased, and their level remained at its highest since mid-2008, the expert knows.

The dynamics of inflation, as well as the pace of economic recovery, will become the main criteria that the Central Bank will focus on when making a decision on the key rate, the Crimean RNCB is confident. After a slight slowdown in price growth in April, it will accelerate in May due to the low base of 2021, so the regulator is highly likely to raise the rate again, Ak Bars Bank explained.

Promotion follows

Photo: IZVESTIA/Alexander Polegenko

The key size at the end of 2021 is expected to be in the range of 5.5–6%, said Vladimir Evstifeev, head of the analytical department of Zenit Bank. He added: which border of this range the rate will gravitate towards will become clear based on the fact of the harvest in Russia and the degree of openness of tourist destinations in the summer and autumn. More than half of the banking analysts (eight) who participated in the Izvestia consensus survey expect the key rate to be 5.5% by the end of the year. Three more spoke in favor of an increase to 5.75%, and the same number were in favor of an increase to 6%.

Contribution of the pandemic: in 2021, the average deposit amount increased to 62%

Financial institutions expect further increases in 2021

Fed meetings in 2021

Publication of US interest rate decisions occurs at 2:15 pm (EST) on the day of the meeting, or the next day if the meeting is a two-day meeting. The official minutes of the last Fed meeting (Minutes of meeting) are published three weeks after it was held. Read more about the US Federal Reserve.

>> Current Fed Interest Rate

January 2 (minutes of the meeting), January 29 (decision on monetary policy), February 19 (minutes of the meeting). ——————————————————————————————————————————— March 18 (decision on monetary policy and speech by the head of the Federal Reserve System) - canceled, April 8 (minutes of the meeting); ——————————————————————————————————————————— April 29 (decision on monetary policy and press conference of the head of the Federal Reserve System), May 20 (minutes of the meeting); ——————————————————————————————————————————— June 10 (decision on monetary policy and speech by the head of the Federal Reserve System), July 1 (minutes of the meeting); ——————————————————————————————————————————— July 29 (decision on monetary policy ), August 19 (minutes of the meeting); ——————————————————————————————————————————— September 16 (decision on monetary policy and speech by the head of the Federal Reserve System), October 7 (minutes of the meeting); ——————————————————————————————————————————— November 5 (decision on monetary policy ), November 25 (minutes of the meeting); ——————————————————————————————————————————— December 16 (decision on monetary policy and speech by the head of the Federal Reserve System), January 7, 2021 (minutes of the meeting). ———————————————————————————————————————————

Compensation for delayed wages

An increase in the key rate to 5 percent will also entail changes in the amount of compensation for late wages.

Example
The amount of salary arrears is 10,000 rubles. The delay period is 10 days. During the delay, a new key rate was in effect - 5%. To calculate compensation, wage arrears must be multiplied by 1/150 of the key rate and the number of days of delay. Accordingly, compensation for ten days of delay will be 33.33 rubles. (RUB 10,000 × 5% / 150 × 10).

Bank of England meetings 2021

The decision on the further monetary policy of Great Britain, as well as the level of interest rates, is made by the Monetary Policy Committee of the Bank of England on a monthly basis. The meetings take place over two days. The publication of the Bank of England's decision on the state's monetary policy is published at 12:00 London time, 2 weeks after the meeting.

>> Current Bank of England interest rate

January 30 (decision and report on monetary policy); ——————————————————————————————————————————— March 26 (decision on monetary policy ); ——————————————————————————————————————————— May 7 (decision and report on monetary policy); ——————————————————————————————————————————— June 18 (decision on monetary policy ); ——————————————————————————————————————————— August 6 (decision and report on monetary policy); ——————————————————————————————————————————— September 17 (decision on monetary policy ); ———————————————————————————————————————————— November 5 (decision and report on monetary policy); ——————————————————————————————————————————— December 17 (decision on monetary policy ). ———————————————————————————————————————————

Penalties on taxes and contributions

The new value of the key rate will affect the calculation of penalties for late payment of taxes and insurance premiums.
From October 1, 2017, the procedure for calculating penalties for late payment of taxes and contributions has changed. True, the changes did not affect individuals, including individual entrepreneurs.

So, the interest rate of the penalty is assumed to be equal to:

For individuals (including individual entrepreneurs):

• 1/300 of the refinancing rate of the Central Bank of the Russian Federation in force at that time;

For organizations:

• for delay in fulfilling the obligation to pay tax for a period of up to 30 calendar days (inclusive) - 1/300 of the refinancing rate of the Central Bank of the Russian Federation in force at that time;
• for delay in fulfilling the obligation to pay tax for a period of more than 30 calendar days - 1/300 of the refinancing rate of the Central Bank of the Russian Federation, valid for the period up to 30 calendar days (inclusive) of such delay, and 1/150 of the refinancing rate of the Central Bank of the Russian Federation, valid for the period starting from 31 -th calendar day of such delay (clause 4 of Article 75 of the Tax Code of the Russian Federation, Letter of the Federal Tax Service of the Russian Federation dated September 28, 2017 No. ЗН-4-22/ [email protected] “On the implementation of the provisions of Federal Law No. 401-FZ”).

Example
An organization transferred VAT in the amount of 146,000 rubles with a delay of 31 days. The amount of late fees will be 778.67 rubles . (RUB 146,000 × 5% × 1/300 × RUB 30,146,000 × 5% × 1/150 × 1).

ECB meetings in 2021

Decisions on the region's monetary policy and European Union interest rates are made by the Governing Council of the European Central Bank. ECB meetings attract particular attention from traders in 2021 in light of the tightening of the Fed's monetary policy and the impact of these factors on the most popular currency pair - euro/dollar.

>> Current ECB interest rate

January 23 (decision on monetary policy and press conference of the head of the ECB), February 20 (meeting report); ——————————————————————————————————————————— March 12 (decision on monetary policy and press conference of the head of the ECB), April 9 (meeting report); ——————————————————————————————————————————— April 30 (decision on monetary policy and press conference of the head of the ECB), May 28 (meeting report); ——————————————————————————————————————————— June 4 (decision on monetary policy and press conference of the head of the ECB), July 2 (meeting report); ——————————————————————————————————————————— July 16 (decision on monetary policy and press conference of the head of the ECB), August 13 (meeting report); ——————————————————————————————————————————— September 10 (decision on monetary policy and press conference of the head of the ECB), October 8 (meeting report); ———————————————————————————————————————————— October 29 (decision on monetary policy and press conference of the head of the ECB), November 26 (meeting report); ——————————————————————————————————————————— December 10 (decision on monetary policy and press conference of the head of the ECB), January 7, 2021 (meeting report). ———————————————————————————————————————————

What else

Keep in mind that raising the key rate has a number of other consequences.
So, for example, monthly payments on some loan agreements are “tied” to the key rate. The key rate is used when calculating interest on controlled transactions listed in the first part of the Tax Code of the Russian Federation.

The rate is also used to determine the amount of loss from the sale of debt, which can be taken into account when calculating income tax.

The new key rate of 5% must be applied from April 26, 2021.

Bank of Japan meetings in 2021

The Bank of Japan's Policy Board meets monthly, making decisions on the country's monetary policy and interest rate levels. Details of the Bank of Japan meeting are published twice: in the Summary of Opinions, which are published 7-10 days after the event, and in the minutes, which are published 7-8 weeks later. These publications usually do not have any particular impact on the markets. In total, the Bank of Japan holds 8 such meetings throughout the year.

>> Current interest rate of the Bank of Japan

January 21 (meeting and decision on the interest rate), January 29 (summary), March 25 (minutes of the meeting); ——————————————————————————————————————————— March 19 (meeting and decision on interest rate) - cancelled, March 30 (summary), May 7 (minutes of the meeting); ———————————————————————————————————————————— April 29 (meeting and decision on interest rate), May 12 (summary), June 19 (minutes of the meeting); ———————————————————————————————————————————— June 16 (meeting and decision on interest rate), June 24 (summary), July 20 (minutes of the meeting); ———————————————————————————————————————————— July 15 (meeting and decision on interest rate), July 27 (summary), September 24 (minutes of the meeting); ———————————————————————————————————————————— September 17 (meeting and decision on interest rate), September 29 (summary), November 4 (minutes of the meeting); ———————————————————————————————————————————— October 29 (meeting and decision on interest rate), November 9 (summary), December 23 (minutes of the meeting). ——————————————————————————————————————————— December 18 (meeting and decision on interest rate), December 28 (summary), January 26, 2021 (minutes of the meeting). ———————————————————————————————————————————

Central bank rate

The central bank rate (discount rate) is the interest rate at which a country's central bank lends money to national banks, often in the form of very short-term loans. Central bank rate control is a method by which central banks influence economic activity. Lower bank rates can help expand the economy by lowering the cost of funds for borrowers, and higher bank rates help reign in the economy when inflation is higher than desired.

The discount rate or central bank rate is sometimes confused with the overnight rate. While the bank rate refers to the rate that the central bank charges banks to borrow funds, the overnight rate refers to the rates that banks charge each other when they borrow funds among themselves. Banks borrow money from each other to cover shortfalls in their reserves.

How the central bank rate affects consumer interest rates: Because the central bank rate has such a strong impact on the overnight rate, it also affects consumer lending rates. Banks charge their best, most creditworthy customers a rate that is very close to the overnight rate, and charge other customers a slightly higher rate.

For example, if the bank rate is 0.75%, banks can charge their customers relatively low interest rates. In contrast, if the central bank rate is 12%, banks will charge borrowers relatively higher interest rates.

Meetings of the Bank of Switzerland in 2021

Meetings of the Swiss Bank SNB are held 4 times a year, quarterly. During these meetings, the country's monetary policy is discussed, and there is also a press conference at which representatives of the Swiss Central Bank talk about the state of the country's economy and announce their decision on the level of the interest rate.

>> Current interest rate of the Bank of Switzerland

March 19 (decision on monetary policy) ; ———————————————————————————————————————————— June 18 (press conference and monetary policy decision); ——————————————————————————————————————————— September 24 (decision on monetary policy ) ; ——————————————————————————————————————————— December 17 (press conference and monetary policy decision). ———————————————————————————————————————————

Late tax refund

If the tax inspectorate returned the overpayment of taxes with a delay, it is obliged to pay interest to the company or individual entrepreneur at the refinancing rate (Article 78 of the Tax Code of the Russian Federation). As a general rule, they must transfer money to the current account within a month after they received an application for the return of the overpayment (clause 6 of Article 78 of the Tax Code of the Russian Federation). But tax authorities may not meet this deadline. Then you need to calculate interest taking into account the key rate.

Example
An organization filed an application for a refund of overpayment of tax in the amount of 140,000 rubles. However, the tax authorities returned the overpayment 8 days late. The accountant submitted an application to the Federal Tax Service for payment of interest for the delay in tax refund. The interest amount was 153.42 rubles. (140,000 × 5% / 365 days × 8 days).

Bank of Canada meetings in 2021

>>Current Bank of Canada interest rate

January 22 (Bank meeting with a report on monetary policy); ——————————————————————————————————————————— March 4 (Bank meeting); ——————————————————————————————————————————— April 15 (Bank meeting with report on monetary policy); ———————————————————————————————————————————— June 3 (Bank meeting); ——————————————————————————————————————————— July 15 (Bank meeting with report on monetary policy); ———————————————————————————————————————————— September 9 (Bank meeting); ———————————————————————————————————————————— October 28 (Bank meeting with report on monetary policy); ———————————————————————————————————————————— December 9 (Bank meeting). ———————————————————————————————————————————

Changes in the key rate of the Central Bank of the Russian Federation by year

During the existence of the key rate of the Central Bank of the Russian Federation, and this is from September 13, 2013, it has changed significantly both upward and downward:

Reserve Bank of Australia (RBA) meetings in 2021

>> Current Bank of Australia interest rate

February 4 (meeting and decision on monetary policy), February 18 (publication of the minutes of the meeting); ——————————————————————————————————————————— March 3 (meeting and decision on monetary policy), March 17 (publication of the minutes of the meeting); ——————————————————————————————————————————— April 7 (meeting and decision on monetary policy), April 21 (publication of the minutes of the meeting); ——————————————————————————————————————————— May 5 (meeting and decision on monetary policy), May 19 (publication of the minutes of the meeting); ———————————————————————————————————————————— June 2 (meeting and decision on monetary policy), June 16 (publication of the minutes of the meeting); ———————————————————————————————————————————— July 7 (meeting and decision on monetary policy), July 21 (publication of the minutes of the meeting); ——————————————————————————————————————————— August 4 (meeting and decision on monetary policy), August 18 (publication of the minutes of the meeting); ———————————————————————————————————————————— September 1 (meeting and decision on monetary policy), September 15 (publication of the minutes of the meeting); ———————————————————————————————————————————— October 6 (meeting and decision on monetary policy), October 20 (publication of the minutes of the meeting); ———————————————————————————————————————————— November 3 (meeting and decision on monetary policy), November 17 (publication of the minutes of the meeting); ——————————————————————————————————————————— December 1 (meeting and decision on monetary policy), December 15 (publication of the minutes of the meeting). ———————————————————————————————————————————

Material benefits from loans

If an organization or individual entrepreneur issued a loan to an employee, founder or other affiliated individuals, then the accountant needs to calculate personal income tax on a monthly basis for material benefits. It arises if the amount of interest on the loan is less than 2/3 of the refinancing rate (subclause 1, clause 2, article 212 of the Tax Code of the Russian Federation). Personal income tax must be withheld from income at a rate of 35% (clause 2 of Article 224 of the Tax Code of the Russian Federation). In this case, the material benefit must be calculated monthly - on the last day of each month during the period for which the loan was received.

Example
An organization issued an interest-free loan to the director for a year. The loan amount is RUB 500,000. The material benefit for September 2020, taking into account the new key rate, will be 1,369.86 rubles . (RUB 500,000 × 2/3 × 5% / 365 days × 30 days). Personal income tax is 479 rubles. (1369.86 × 35%).

Changes in key rates and online exchange rate EUR USD

The change in the key rate was one of the reasons for the powerful trends in EUR USD

EURUSD Chart by TradingView

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