Analyst: The Bank of Russia may lower the key rate to 11%

      On April 24, the Board of Directors of the Bank of Russia will hold another meeting on the key rate. We asked an analyst what decision the regulator might make and what factors could influence it. Recall that in March, the Central Bank lowered the rate by 50 basis points to 15% per annum. According to the expert, a rate cut to 14.5% is possible in April, and by the end of the year, it could drop to 11-12%.

      Natalia Milchakova, leading analyst at Freedom Finance Global:

      "We believe that at the meeting on April 24, the Central Bank of the Russian Federation is most likely to decide to lower the key rate by 0.5 percentage points to 14.5% per annum. The decision may be influenced by factors such as lower inflation in spring compared to January and February, a relatively stable ruble, high oil prices, and an improvement in the situation with oil and gas budget revenues against the backdrop of high oil prices.

      At the same time, we do not consider this decision to be the only possible one. In our opinion, we cannot rule out a pause in lowering the key rate, which would be the first since last summer when the "key" was lowered from meeting to meeting of the Board of Directors of the Central Bank of the Russian Federation. The very unstable weekly inflation in March and the rise in inflation expectations among the population recorded in March, the persistence of geopolitical risks for Russia, as well as very high government spending in the first quarter of this year, which will also reflect in rising inflation, support this option. Moreover, the official statistics from Rosstat on inflation for March and the April survey data on inflation expectations of Russians have not yet been released. If these data turn out to be worse than the consensus expectations of analysts and the forecasts of the regulator itself, the likelihood of keeping the key rate unchanged on April 24 will significantly increase.

      Earlier, the Central Bank of the Russian Federation warned that pauses in lowering the key rate in 2026 are possible, despite the overall trajectory of the key rate moving downward. Therefore, we currently believe that the probability of the Central Bank of the Russian Federation making a decision on a new cut in the key rate on April 24 is 60%, while the probability of another decision to keep the "key" unchanged is 40%. After the release of the March inflation data and inflation expectations for April, we may change our opinion on the future decision of the Central Bank of the Russian Federation depending on the incoming data. However, for now, we maintain our baseline forecast for the Central Bank's key rate by the end of December 2026, which assumes that the rate will decrease to 11-12% per annum."