The regulator was also asked whether it could use freezing deposits to combat inflation as an alternative to raising the key rate. At high rates, it is profitable for citizens to earn on deposits and unprofitable to take out loans. The Central Bank noted that when clients place funds in bank deposits and other financial instruments, demand for goods and services decreases, and inflation slows down. In the event of a freeze, depositors will lose confidence in banks and the financial system as a whole for a long time. The key rate will stop working, and the Central Bank will lose its main tool for influencing demand and inflation, the regulator explained.
