Analysts: by the end of the year the Central Bank may cut the key rate to 15 percent.

      Recently Andrey Gangan, director of a department at the Central Bank, said that he does not rule out the possibility of a further reduction in the key rate before the end of this year. He is quoted by rg.ru. We asked analysts whether, in their view, their forecasts have changed and which factors will determine the level of the key rate in the coming months.

      Vladimir Chernov, analyst at Freedom Finance Global:

      "My baseline forecast envisages a reduction of the key refinancing rate in 2025 to 15–16% per annum.

      I have barely changed my forecast for the rate this year, although I have occasionally adjusted the size of the cut at the upcoming meeting depending on incoming macroeconomic data. At the beginning of the year I forecast that cuts would start in the summer and that by year-end the rate would fall to 15% per annum, and so far that is what is happening. Yesterday I gave a more cautious forecast for the September meeting against the backdrop of a rise in 12‑month inflation expectations among the population in August by 0.5 percentage points, to 13.5%. If just a week ago, in the context of five consecutive weeks of deflation in Russia, I expected a September rate cut of 100 or 200 basis points (bps), yesterday I adjusted that forecast to a cut of 50–150 bps, but my baseline scenario remains a 100 bp reduction. Moreover, yesterday I also slightly revised my year‑end rate forecast to 15–16% per annum, but my baseline scenario still looks like 15% to me.

      The level of the key rate will depend primarily on:

      - The pace of inflation and inflation expectations, both among the population and businesses. If they begin to decline steadily, this will create room to cut the rate. At the same time, citizens still expect prices to rise, which will restrain the Central Bank from sharply easing policy.

      - Credit activity. A slowdown in lending, especially in the corporate segment, reduces demand-side pressure and contributes to lower inflation, which signals the regulator.

      - The ruble exchange rate, since an appreciation of the Russian national currency helps restrain price growth for all imported goods and services, while its weakening, conversely, creates pro‑inflationary risks.

      - Macroeconomic data and incoming signals. The Central Bank will act cautiously, guided by actual data on inflation, expectations, lending and the exchange rate.

      - Geopolitics, since a tightening of sanctions against the Russian Federation would be a significant pro‑inflationary factor, while their easing or even partial removal, on the contrary, could slow the pace of price growth in the country."

      Olga Belenkaya, head of macroeconomic analysis at FG "Finam":

      "We expect the Central Bank to continue further monetary easing against the backdrop of a substantial decline in inflationary pressure and a slowdown in economic growth. The next meeting of the Central Bank’s Board of Directors will be held on September 12. Much can still change by then, so it is difficult now to predict the specific size of a cut in the key rate without seeing the full picture of the data that will be available at the time of the meeting. But we believe that cuts of 100, 150 or 200 bps could again be considered. So far, in our view, the pace of deceleration in inflation and economic growth favors repeating the 200 bp step, i.e. lowering the key rate to 16%. However, other factors may be taken into account — in particular, inflation expectations, budget policy risks, and developments in the geopolitical situation.

      Taking into account current economic data, we expect the key rate at year‑end to be 14–16% (which corresponds to the lower half of the forecast range in the Bank of Russia’s baseline forecast). At the same time, decisions will be made from meeting to meeting, taking into account data and forecasts on inflation, inflation expectations, economic activity, lending and savings activity, new budget projections, external demand and geopolitical changes."