The Central Bank allowed a more significant reduction in the key rate in July

The Central Bank of Russia may consider a more significant reduction in the key rate next month if inflation is confirmed to be moving towards 4%. Alexey Zabotkin, Deputy head of the Central Bank, told reporters on June 30 at the Summer Macroeconomic School of the Bank of Russia, answering the question whether there would be a decrease of more than 100 basis points.

"The decision at the July meeting will be dictated by the degree of our confidence that inflation is moving along a trajectory that will ensure a return to 4% inflation in 2026," RIA Novosti quoted Zabotkin as saying.

According to him, it is important to obtain confirmed data on the reduction of inflation to 4%. Zabotkin noted that in this case, the rate cut will be more significant than in June this year.

The Central Bank lowered its key rate for the first time in three years. Why is this important?

On June 6, the Central Bank of the Russian Federation lowered its key rate to 20% after a long period of tight monetary policy. According to the Central Bank, domestic demand still outstrips the possibilities of expanding the supply of goods and services, but the Russian economy is gradually returning to a balanced growth trajectory.

Later, on June 20, Russian President Vladimir Putin said that moderate inflation and low unemployment should be achieved in Russia. He noted that, according to statistics, annual inflation has already dropped to less than 10%. At the same time, Putin stressed that inflationary dynamics are developing better than the expectations of many experts and the forecasts of the Bank of Russia.