Evgeny Goryunov, Head of the Monetary Policy Department at the Gaidar Institute, in a comment for News.ru, assessed the Bank of Russia’s decision to lower the key rate to 14% and discussed what to expect from monetary policy through the end of the year.
According to the expert, the regulator’s decision was expected: most analysts had forecasted a 0.25 p.p. cut in the key rate. At the same time, the Bank of Russia continues to take a cautious approach, as current inflation rates remain close to the target level.
Evgeny Goryunov noted that the recent acceleration in price growth is largely due to rising motor fuel prices. However, the Central Bank views this factor as temporary and does not consider it a basis for tighter monetary policy. Barring any new major economic shocks, the cycle of rate cuts is likely to continue.
“The Bank of Russia’s decision was expected: most market participants had forecast a cut in the key rate to 14%. The regulator considers the acceleration in inflation caused by rising fuel prices to be a temporary phenomenon and does not yet see a need to change the course of monetary policy. If current trends persist, the key rate will most likely continue to decline in small steps and could reach 12.5–13% by the end of the year,” concluded Evgeny Goryunov.