The deputy chairman of the Central Bank explained the need for a cautious reduction in the key rate

The reduction of the key rate by the Central Bank of Russia requires caution in order for the growth of production capacity in the country to surpass the current level of demand. This was announced on January 23 by Alexey Zabotkin, Deputy Chairman of the Central Bank.

"It is important that the positive gap is closed — that is, that production capacity and potential GDP growth exceed the current level of demand. For this, demand should not fall, but should grow at a restrained pace. Therefore, caution is required in reducing the key rate," RIA Novosti quoted him as saying.

Zabotkin noted that it depends on the level of inflation expectations of the population, which rate people will consider attractive for savings rather than for consumption. This, in turn, determines the real rigidity of monetary policy at the same key rate. According to him, in the period 2018-2019, when the Central Bank managed to steadily fix inflation at about 4%, the population's expectations were at the level of 8-10%, which is lower than current figures. However, the relationship between expectations and actual inflation is not linear.

The deputy chairman of the Central Bank added that with steadily lower inflation than in 2023-2024, inflation expectations should also decrease.

While the Central Bank is hitting 12: in 2026, the key rate will remain in double digits

It will not be reduced quickly, even though inflation is close to the target — is it worth carrying money for a deposit or buying an apartment

Yesterday, Alexander Shokhin, president of the Russian Union of Industrialists and Entrepreneurs (RSPP), said that the accumulated cooling effect of the Russian economy requires a change in course towards sustainable growth, so the key rate will decrease to 13% by the end of 2026. He also stressed that by 2025, Russian companies have demonstrated a high degree of flexibility and the ability to cope with various challenges, including external economic factors and complex internal financial policies. In particular, this concerns the high key interest rate and the reduction in budget momentum, which has created additional difficulties for entrepreneurs.

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