Evgeny Goryunov, Head of Monetary Policy Department, commented on the Central Bank's decision to lower the key rate by 100 basis points.
"One percentage point cut to 17% indicates that the Bank of Russia is taking a cautious wait-and-see approach. Despite the fact that seasonally adjusted inflation is close to the target level, the 17% rate still creates rather tight monetary conditions. Although inflation and economic activity are generally in line with the Central Bank's baseline scenario, a number of factors—including a revival in lending, the limited disinflationary effect of the normalization of fiscal policy, a persistently overheated labor market, rising inflation expectations, and several other factors—have prompted the regulator to slow the pace of policy easing," , the expert said.
Evgeny Goryunov pointed out that the Central Bank's press release contains an important signal: “In the medium term, the balance is shifting toward pro-inflationary risks, which may indicate a possible pause in policy easing in 2025, and possibly its completion by the end of next year,” the expert said.