The recent release of the summary of the key rate discussion sheds light on various economic factors, including inflation, monetary and external conditions, and alternatives to the key rate decision. Participants in the discussion acknowledged that although inflation remains high, signs of deceleration are emerging. The slowing expansion in lending, a slight decline in consumer demand growth, and a reduction in labor shortages at enterprises contribute to this environment.
The discussion highlighted that tight monetary policy, along with factors such as the scheduled cancellation of easing in banking regulation and macroprudential policy tightening, will continue affecting lending dynamics. However, there is still uncertainty about their combined impact. Participants agreed that more time is needed to assess further changes in lending under these circumstances.
Following these discussions, the Board of Directors decided to maintain the key rate at 21.00% per annum. Despite this decision, it was emphasized that there is a need to evaluate whether further increases in the key rate might be necessary at future meetings.
The updated medium-term forecast suggests that for inflation to decrease to a target close to 4% by 2026, the key rate path for 2025-2026 may need to be higher than previously expected. More details can be found in the Commentary on the Bank of Russia’s Medium-term Forecast.