Experts have predicted a reduction in the key rate to 18%
The central bank may reduce the key rate to 18% at the next meeting on Friday, July 25. Experts consider such a step likely against the background of weakening inflation and falling business activity, which confirms the effectiveness of the tight monetary policy. Financial market analysts told Izvestia about this on July 21.
"At the July 25 meeting, the key rate is likely to be cut by 2 percentage points to 18%. By the end of this year, the rate may reach a level of about 14% per annum," said Alexey Lossan, an analyst at the Compare marketplace.
According to him, this will lead to a decrease in the profitability of deposits: short—term deposits will be offered at 13-14% per annum, and long-term deposits in the range of 15-15.5%. At the same time, consumer loan rates will remain at 36-38%, while car loans and mortgages may adjust by a maximum of 1-2 percentage points by the end of the year.
Andrey Glushkin, Managing Partner of MAIN DIVISION, also believes that a reduction to 18% is a "likely and economically reasonable step" in the context of slowing inflation and weakening consumer demand. In his opinion, the high rate "is already having a deterrent effect on investment" and hinders the recovery of economic dynamics.
He clarified that in recent months, inflation has shown a steady downward trend. Annual price growth is slowing down, and seasonally adjusted indicators are approaching the target level. At the same time, economic growth is slowing down: Consumer demand is declining, and activity in industry and construction is weakening. Against this background, keeping the rate at 20% may become an excessive constraint that prevents the restoration of economic dynamics.
"The reduction in the key rate will affect the financial markets quite quickly. Interest rates on deposits and loans will decrease, which will increase demand for borrowed funds and stimulate domestic consumption. The attractiveness of the bond market will increase, as lower yields will lead to an increase in the value of securities. Fluctuations in the foreign exchange market are also possible: the profitability of ruble assets will decrease, which may create pressure on the exchange rate, but while maintaining control over inflation, this effect will be limited," Glushkin said.
He added that banks will face a reduction in interest margins, as deposit rates are reviewed faster than on previously issued loans. This will require a restructuring of product policy and a strengthening of the role of non-bank sources of income.
Valery Tumin, a member of the Expert Council on the Development of the Digital Economy under the State Duma Committee on Economic Policy, noted that the regulator has several reasons for lowering the key rate. In particular, despite the increase in utility tariffs, inflation expectations have not yet become a decisive factor.
According to him, there is a need for a short—term weakening of the ruble in order to adapt to new external economic conditions, in particular, to sanctions from the European Union (EU) and possible actions by the administration of US President Donald Trump. In particular, we are talking about another reduction in the ceiling of prices for Russian oil.
"The Bank of Russia's signals on monetary policy easing, to which the Russian market is responding positively. Expectations for a rate cut to 18-19% fit into the general policy of the financial regulator to reduce the key rate to 16-17% by the end of 2025," he stressed.
Anatoly Aksakov, Chairman of the State Duma Committee on the Financial Market, said on July 20 that by the end of the year the key rate in the Russian Federation could drop to 15%, while the optimal value for the Russian economy is 7%. He noted that now there are different options for the development of the situation by the end of this year, but he assumes that the rate will drop to 15%.
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