Find a match: the market expects a reduction in the key rate to 14% on Friday
After almost two years of tight monetary policy, the Bank of Russia may take a new step towards borrowers and the business community. As early as June 19, the regulator, as analysts polled by Izvestia expect, will reduce the key rate to 14%. Slowing inflation, a strong ruble and a cooling economy give the Central Bank the opportunity to ease its policy. However, a step of more than 0.5 percentage points is unlikely due to increased inflation expectations and uncertainty about the budget deficit. On the other hand, the words of Vladimir Putin, who drew attention to a decrease in inflation, may push the Central Bank to a more drastic reduction in the "key". How the regulator's decision will affect interest rates on loans and deposits is in the Izvestia article.
How much will the Central Bank reduce the key rate
The regulator is likely to reduce the key rate from 14.5% to 14% this Friday, June 19. 14 out of 15 experts surveyed who participated in the Izvestia consensus forecast called this outcome the most likely. The decision of the Bank of Russia will be influenced by a strong ruble, a cooling economy and a slowdown in inflation.
President Vladimir Putin gave a positive signal at a meeting with the government on June 10. The Head of State said that the current dynamics of inflation allows us to count on a further decrease in the "key".
Russian President Vladimir Putin during a meeting with members of the Government of the Russian Federation
— Inflation is falling. How long has she been? A little over five percent. I think we have the right to count on a reduction in the key rate and on achieving other necessary parameters," the president noted.
At the same time, the chairman of the Bank of Russia, Elvira Nabiullina, missed both the most important St. Petersburg International Economic Forum and the meeting with the president due to sick leave. However, this did not affect analysts' forecasts — the decision on the rate is made by the Board of directors of the Central Bank. And not only them.
As part of SPIEF 2026, Finance Minister Anton Siluanov noted that the reduction in the key rate of the Central Bank of the Russian Federation is the main barometer of economic growth. According to the minister, fiscal and monetary policies are closely intertwined, and the Finance Ministry is in daily interaction with the Bank of Russia, "discussing for hours" how to adjust the balance sheet.
A cautious decline to 14% or a pause are the two most likely options for the Central Bank's decision, said Tatiana Belyanchikova, Associate Professor of the Department of Global Financial Markets and Fintech at Plekhanov Russian University of Economics. A decrease to 14% is more likely.
Continuing the cycle with the usual 0.5 percentage point step looks like the most consistent solution, agreed Pavel Biryukov, Chief Economist at Gazprombank. This is supported, among other things, by a sharp slowdown in the growth of the budget deficit: in May it increased by only 100 billion rubles, whereas a month earlier it increased by 1.4 trillion rubles. The pace has slowed down because the government has stopped making large advances on its orders. Previously, money from such payments immediately entered the economy and accelerated inflation, but in May it was almost gone, the budget stopped putting pressure on prices, and the regulator was able to calmly reduce the key rate.
However, a pause in the reduction cycle cannot be ruled out either, said Olga Belenkaya, Head of the Macroeconomic Analysis Department at Finam. The Central Bank may be pushed to such a decision by the acceleration of lending in April and the increased inflation expectations of the population (13%), confirmed Rodion Latypov, senior economist at VTB Group.
One should not count on a more active reduction in the key rate, said Vladimir Chernov, analyst at Freedom Global. According to him, it is premature to immediately reduce to 13.5%, since the Central Bank still has little confidence that inflation is steadily moving towards the 4% target. Nevertheless, Vladimir Putin's recent statement may contribute to such a decision, added Sergey Zaversky, head of the Analytical research department at the Institute for Integrated Strategic Studies.
Why the regulator will continue to reduce the key rate
The main argument in favor of lowering the rate is a steady slowdown in inflation. According to the Central Bank, in April, seasonally adjusted price growth dropped below 4% in annual terms. The annual inflation rate at the beginning of June was 5.31%. In general, it is slowing down faster than the regulator's expectations, Pavel Biryukov from Gazprombank emphasized.
That is why the current level of the real interest rate — the difference between the key rate and inflation — looks excessively high, because it has reached about 9%. Under normal conditions, the Central Bank's rate exceeds the price increase by about 1.5%, Sergei Zaversky recalled. According to this logic, the "key" should be approximately at the level of 5.5–7%. However, the regulator deliberately maintains a strict policy in order to achieve a steady slowdown in price growth.
At the same time, economic activity in the country is noticeably cooling, said Natalia Pyrieva, head of the analytical department at Digital Broker. According to the results of the first quarter, GDP decreased by 0.2% for the first time in three years, while investments in fixed assets fell by 14.3% year-on-year. Business activity also continued to slow down. Ultimately, the regulator has fewer reasons to maintain a strict policy and more reasons to mitigate it.
The ruble also has a restraining effect on prices. In May, the national currency strengthened by 12.6% compared to April, reaching the level of 71 per dollar, according to the Central Bank. This makes imported goods that are bought with foreign currency cheaper. As a result, this restrains the overall price growth even without additional measures from the regulator, said Evelina Gomonko, associate professor at the Faculty of Economics of the RUDN University.
Nevertheless, the risks of accelerating inflation still remain, experts warned. The conflict in the Middle East leads to an increase in energy prices, and higher salaries and staff shortages increase business costs, which are eventually transferred to the prices of goods and services.
How will the decision on the key issue affect the Russians
After lowering the key interest rate, banks will gradually adjust the cost of their products, explained financial advisor and founder Rodin.Capital Alexey Rodin. Lenders will promptly lower deposit rates — they have already begun to decline and now average 13-16% per annum. But the reduction in the cost of loans will be delayed.
Mortgages are particularly sensitive to key changes, the expert explained. If the interest rates on a 20-year loan for an apartment worth 15 million rubles decrease even by 1 percentage point, the monthly payment will drop by 10 thousand rubles. Therefore, even a slight easing of the regulator's policy may encourage those who have been postponing a deal in the last two or three years to buy a home.
When the Central Bank's interest rate decreases, bonds usually increase in price, explained Oleg Abelev, head of the analytical department at the Rikom-Trust investment company. At the same time, yields on floating coupon bonds should decrease.
The regulator's decision is not likely to significantly affect the exchange rate. The dynamics of the ruble today is determined by foreign trade flows and the balance of supply and demand of the currency, rather than the size of the rate, which remains high as it is, Oleg Abelev believes.
In general, the 0.5 percentage point reduction in the key rate has already been taken into account by the market, said Alexander Dzhioev, head of the Macroeconomics and Stock Market Group at Alfa Capital Management Company. According to him, the key factor for investors will not be the decision itself, but the regulator's signal and its rhetoric at the press conference. If the Central Bank indicates the likelihood of a pause at the next meetings, this may significantly affect market expectations and asset dynamics.
Against this background, government and business representatives are increasingly talking about signs of a cooling economy. In such a situation, the Bank of Russia faces a more pressing question: is actively curbing inflation worth the risk of an excessive slowdown in economic activity? The regulator's decisions affect the economy with a significant delay, so it is important to give a clear answer to it before signs of obvious hypothermia appear.
Переведено сервисом «Яндекс Переводчик»
