The expert did not rule out a reduction in the Central Bank's key rate to 16% in 2025.

The Central Bank of Russia may continue its monetary policy easing cycle and reduce its key interest rate to 16% by the end of 2025. Such a development is likely if the current positive macroeconomic trends continue, Evgeny Shatov, a partner at Capital Lab, told Izvestia on August 21.

"The Central Bank does admit the possibility of lowering the key rate by the end of 2025, but the decision will depend on a number of factors: inflation dynamics, stability of the ruble, budget conditions and oil prices," the expert explained.

According to him, the current high rate of 18% is a measure aimed at curbing inflationary pressures. If inflation continues to slow down in the second half of the year and the ruble remains relatively stable, the Central Bank may decide to further reduce the rate.

"The most likely scenario is a moderate policy easing in the range of 1-2 percentage points, which will bring the rate to a range of about 16-17%," the analyst said.

As for the consequences for the economy, according to the expert, they will be heterogeneous.

"For consumer lending, a moderate decrease means cheaper borrowing, however, it is insufficient to significantly increase lending levels. The effect will be more noticeable in the mortgage segment," Shatov said.

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In addition, a possible easing of monetary policy will have different effects on financial markets. In the bond segment, a reduction in the key rate will lead to higher prices for government and corporate securities. The stock market will also receive support.

Pressure on the ruble may increase due to a reduction in the difference in profitability with foreign assets, but export earnings and fiscal policy will continue to play a key role for the exchange rate.

"In general, a reduction in the key rate by the end of 2025 is possible, but it will be cautious and limited. The main positive effect will be seen in mortgages and the bond market," Shatov concluded.

At a meeting on July 25, the Central Bank of the Russian Federation lowered the key rate to 18% per annum. It was noted that further decisions on the key rate will be made depending on the sustainability of the slowdown in inflation and the dynamics of inflation expectations. According to the Central Bank's forecast, annual inflation will decrease to 6-7% this year, and return to 4% in 2026. The head of the regulator, Elvira Nabiullina, said that the Central Bank allows for a reduction in the key rate by 1, 1.5 or 2% in the future.

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