Masterprof head Pavel Brun described a double increase in borrowing costs in Business FM’s 28 October 2024 report: the key rate rose from 19% to 21%, while his bank’s additional margin moved from three to five percentage points.
How the two increases combine
- For an unchanged RUB1 million balance over a full year, simple interest at 22% is RUB220,000.
- At 26%, the corresponding amount is RUB260,000.
The central bank’s decision
The Bank of Russia’s 25 October decision raised the key rate by 200 basis points to 21%. The regulator cited demand exceeding production capacity, rising inflation expectations and additional budget spending. Its October assessment put annual inflation at 8.4% on 21 October and forecast 8.0–8.5% for the year.
The new rate was 2.5 times that 8.4% inflation reading, calculated as 21 divided by 8.4. This comparison concerns two reported nominal percentages; it does not determine a borrower’s real financing cost or substitute for the company’s loan terms.
Why business lending still expanded
In her 25 October statement, Governor Elvira Nabiullina attributed continued corporate lending growth partly to subsidised programmes, project finance, ongoing investment projects and state-supported projects. Demand for market-rate loans was weakening. The bank raised its forecast for overall credit growth to 15–18% in 2024 and 8–13% in 2025.
Nabiullina also described more intensive use of available capacity and labour, logistics bottlenecks and more complicated supply chains. These constraints provide the policy setting for Brun’s account of postponed production development; they are the regulator’s economy-wide assessment, rather than a separate measurement of Masterprof’s operations.
