The key question is: the Central Bank may begin to lower the rate more carefully.
The Bank of Russia lowered its key rate by 0.5 percentage points, to 14.5% per annum, following its meeting on April 24. The chairman of the Central Bank, Elvira Nabiullina, said that the regulator does not see any risks of hypothermia in the economy. She also allowed a pause in easing policy at the next meeting. Now the Central Bank can start acting more carefully — the signal for the market turned out to be harsh, experts say. What is behind the Central Bank's decision and how it will affect loans, deposits and the ruble is in the Izvestia article.
Why the Central Bank is cautiously lowering the rate
On April 24, the Board of Directors of the Central Bank lowered the key rate by 0.5 percentage points for the eighth time in a row and set it at 14.5% per annum. At the same time, the Bank of Russia raised its forecast for the average key interest rate. Now the regulator expects that in 2026 it will amount to 14-14.5% per annum, and in 2027 - 8-10%, according to a press release. The regulator explained this by maintaining pro-inflationary risks.
According to the Central Bank's forecast, annual price growth will decrease to 4.5–5.5% in 2026. At the same time, stable inflation will be close to 4% in the second half of the year.
— It took mankind 50 years to return to the moon. We will also return to 4% inflation, I am sure of it. And I am sure that this will happen much faster," said the Chairman of the Central Bank, Elvira Nabiullina.
The Bank of Russia will assess the expediency of further lowering the key rate at the next meetings, depending on the sustainability of the slowdown in inflation and the dynamics of expectations for price growth. It also depends on the assessment of risks from external and internal conditions.
The decision to lower the rate was expected. The majority of experts polled by Izvestia predicted a step of 0.5 percentage points, up to 14.5%. However, the regulator made it clear that there is room for further mitigation, but the actions will be careful.
A decrease of 0.5 percentage points is a compromise therapy in which the Central Bank helps the economy, but does not reignite inflation, explained Marina Nikishova, chief economist at Zenit Bank. The main argument for mitigation was the risk of excessive cooling of the economy against the background of extremely weak data on the consumer sector, the expert believes.
According to Rosstat, retail trade grew by only 0.5% in January-February, compared with 3.2% a year earlier. The index of business confidence in retail trade dropped to -8 points, the worst reading since 2006. According to the Ministry of Economic Development, the decline in GDP in January-February was 1.8% year-on-year.
The cooling economy supports the continuation of the monetary policy easing cycle. It is being pushed by a slowdown in business activity and a decrease in domestic demand, added the head of the expert analytics department of the financial marketplace "Banks.<url>" by Inna Soldatenkova. According to the expert, a more decisive step — 1 percentage point — is hindered by the persistence of pro-inflationary risks.
Maxim Tymoshenko, Director of the Financial Markets Department at Russian Standard Bank, shares a similar opinion, so the Central Bank will reduce the rate very carefully, in small steps. The main factor causing concerns about the growth of inflation expectations remains the increase in budget expenditures. They will be partially offset by higher energy prices due to the blockade of the Strait of Hormuz, but they still remain high.
The crisis in the Middle East speaks in favor of such a reduction in the rate, which is reflected in world energy prices and logistics, which translates into an increase in the cost of imported goods, said Pavel Zholobov, senior director of financial institutions ratings at the NRA rating service.
Hypothermia and inflation: which will outweigh
Answering a question from Izvestia, Elvira Nabiullina said that the Central Bank now sees no risks of hypothermia in the economy.
— However, we believe that we have closed the gap with overheating. The main thing is not to reopen this gap. This requires a very careful monetary policy," she stressed.
The output gap is the difference between how much an economy actually produces and how much it could produce with full capacity utilization and normal unemployment. If the actual GDP is higher than the potential, this is "overheating" (demand is outstripping supply, prices are rising). If it is lower, it is "hypothermia" (production is idle, which threatens stagnation). The Central Bank monitors this indicator to decide where to move the key rate.
The topic of possible hypothermia was increasingly heard against the background of the regulator's recent decisions on the key rate. Maxim Reshetnikov, the head of the Ministry of Economic Development, explicitly stated about such risks in February of this year.
— We expect a further slowdown in the economy in the first half of the year. The recovery in growth rates will occur at best at the end of 2026, but most likely in 2027," the minister noted, calling the slowdown in the economy a natural price to pay for lower inflation.
Now, for the regulator, the situation looks like a classic balance sheet on the verge, said Alexey Kuzmin, Chairman of the Board of JSC National Savings Bank. Inflation is formally slowing down, but remains "sticky." On the other hand, signs of a cooling economy are becoming more and more pronounced, which can no longer be ignored.
For the Central Bank, this is a strong signal that the tight PREP has reached its limit and keeping the rate high is too dangerous for economic growth, said Marina Nikishova from Zenit Bank. But despite the pressure from business, the Central Bank cannot sharply bring down the key rate, as inflation remains above the target of 4%.
Right now, the risk of a further slowdown in the economy is more important than the rate of decline in inflation from the notional 6% to 4%, says Denis Popov, managing expert at the PSB Center for Analytics and Expertise. Therefore, the Central Bank probably considered it appropriate to continue easing, although without accelerating the pace.
How much will deposit and loan rates decrease?
After the March decline, the key market reacted as expected: deposit rates followed the decision, and the effect on loans was lagging, said Inna Soldatenkova from <url>. The average rate on consumer loans dropped from 28% to 27.5% per annum, on car loans — to 23.9%, and on market mortgages — from 20.4% to 19.9%. If the key rate drops to 14.5%, this trend is likely to continue, the expert believes. However, in her opinion, it is not worth waiting for a significant reduction in the cost of loans in the coming months. The Central Bank's restrictions on granting loans to over-indebted borrowers limit banks' interest in risk.
New loans will become cheaper only over time. Average market mortgage rates will also respond with a decrease of 0.5 percentage points in a few weeks, Finam analyst Igor Dodonov expects. Demand for housing may pick up, especially in the second half of the year, said Sergey Maltsev, MTS Bank's Director of Investment and Premium Services.
He added: at the same time, deposit rates will gradually decrease along with or ahead of the general trend. Igor Dodonov clarified: after the previous meeting, the average yield on deposits for up to a year fell by 0.3–0.5 percentage points. With the new decision of the Central Bank, it will continue to move down and in a few weeks it may fall even within 0.5 percentage points.
Where will the bid go next
The choice of step will be determined by the operational inflation picture in April and the assessment of the balance of risks from external conditions, Inna Soldatenkova notes. An additional argument in favor of a reduction is the inflationary dynamics: in the week from April 14 to April 20, annual inflation slowed to 5.77%, and the weekly price increase for the second time in a row was close to zero.
The upcoming meeting will be a "reference" meeting, with an update of the medium—term forecast, recalled Andrey Zolotov, portfolio manager of Alfa Capital Management Company. A change in the regulator's estimates on inflation and the economy may have no less impact on the market than the actual rate decision.
At the next meeting, the Central Bank may take a pause in lowering the key rate, said Central Bank Chairman Elvira Nabiullina.
In case of increased pro-inflationary risks, the space for reducing inflation this year may be reduced, said Olga Belenkaya, Head of the Macroeconomic Analysis Department at Finam. By the end of the year, it may reach 12.5%, although the risks are more likely shifted towards a higher rate, predicts Mikhail Vasiliev, chief analyst at Sovcombank. According to him, tight monetary policy will continue to support the ruble, although it is gradually decreasing with each reduction in the key interest rate.
However, the decision of the Ministry of Finance to resume transactions with the currency under the budget rule from May will have the most significant impact on the national currency, Pavel Zholobov from the NRA is sure. In his opinion, this may lead to a weakening of the national currency to 80-85 rubles per dollar in late spring.
Investors should keep a diversified portfolio that will be resistant to different scenarios, Mikhail Vasiliev believes. Conservative market participants can choose deposits (with a yield of 12-14%) and reliable corporate bonds. A share of assets can also be placed in long—term OFZs and shares, with the expectation of further slowing inflation and continuing the cycle of lowering the key rate, the expert concluded.
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