Bank of Russia's extreme key rate leads to increase inflation in the country

Subject. The article explores the impact of the Bank of Russia's exorbitant key rate on inflation growth in the country. Objectives. The study aims to determine the level of influence of the exorbitant key rate of the Bank of Russia on inflation growth in the country. Methods. We employed methods of scientific and information base, synthesis and grouping of obtained data. The theoretical basis was formed by the works of domestic and foreign scientists. Results. We revealed that high key rate contributes to a rise in the cost of money, its withdrawal from the real sector of the economy, pushing it into the financial sector, and leads to "money famine" in the economy, acceleration of inflation and Russian ruble weakening. It worsens business lending, slows down investment in the real economy, thereby blocking opportunities for economic development. In conditions of expensive credit and growing uncertainty in the economy, businesses include risks in the price of goods and provoke inflation. Conclusions. Our proposed option maintains investment activity in the economy, which will ultimately lead to an increase in domestic supply and labor productivity. The Government of the Russian Federation should increase and expand the program-targeted principles of financial management, while developing the public sector partnerships.