Nabiullina allowed a reduction in the key rate in July

There is room for a reduction in the key rate at the next meeting in July. This was announced on July 2 by the Chairman of the Bank of Russia, Elvira Nabiullina.

"Before that, we assumed that, yes, there really is room for a rate cut. In principle, there is room for a reduction in the rate. Only the timing and pace at which we can reduce the rate will depend on the development of the situation," the head of the regulator explained in an interview with the Vesti news agency.

Nabiullina noted that in July, the Central Bank will update the forecast of the situation, taking into account all relevant factors. She also noted that the secondary effects of the situation in the fuel market may affect the regulator's decision on the key rate.

The key question is: the Central Bank may begin to lower the rate more carefully.

In April, the regulator chose a compromise between fighting inflation and economic growth.

Nabiullina said at a briefing at the Central Bank's Financial Congress on July 2 that the regulator had raised its forecast for the key rate trajectory. Current expectations for 2026 are at the level of 14-14.5%. Nabiullina added that the forecast is influenced by the future assessment of risk premiums, including the certainty or uncertainty of the country's fiscal policy.

Nabiullina added on July 1 that the Bank of Russia is not interested in maintaining high interest rates, but their premature reduction could lead to a sharp acceleration of inflation and stagflation. According to her, the availability of loans depends primarily on the rate of price growth. The head of Sberbank, German Gref, said on June 30 that the Russian economy was already supercooled, and the Central Bank's key rate needed to be lowered.

On June 19, the central bank decided to reduce the key rate by 25 basis points to 14.25%. As noted in the regulator, the trend towards easing monetary conditions remains, but their overall level remains tight.