Aleksey Vedev, Head of Financial Studies Department of the Gaidar Institute, commented to Gazeta.RU on the forecast of the key rate change to be approved by the Central Bank at the next Board of Directors meeting, scheduled for Friday, July 24.
On July 24, the Central Bank will hold a meeting of the Board of Directors to consider the possibility to change the key rate that determines the credit value. The previous meeting took place on June 19 and was remembered for reduction of rate by one percent at once, from 5.5% to 4.5%. This was a remarkable and unprecedented decision for traditionally conservative Central Bank. Since the introduction of the key rate in 2013, it has not dropped below 5.5%. Last time, the rationale for the sharp change of the rate was the spread of the coronavirus epidemic, a sharp decline in oil prices and a slowdown in inflation.

Alexey Vedev is confident that the Central Bank is preparing for the second radical rate reduction by 0.5%. As a result, the 4% rate will remain at least until the end of the year and then, the regulator will study the effects of the changes and decide what to do next.
 “If the whole world follows the practice of lowering the refinancing rate, then it is all but logical for Russia to further ease it, however, definitely, not to zero”, the expert says.

In his opinion, the crisis that had cast the Russian economy and intensified by the pandemic is not a V-shaped, rather, it is L-shaped.
“Thus, nothing will recover quickly. This is a viscous crisis with a protracted recovery. It would be possible to return, perhaps, not earlier than 2023, at least to the level of 2019, before the pandemic broke out”, concluded Alexey Vedev.