Reduction scenarios in key rates allowed by VTB for September
Bank of Russia to Decide on Key Rate Adjustment on September 12
In anticipation of the Bank of Russia's decision on the key rate on September 12, various opinions have been voiced by economic experts. Dmitry Pyanov, a prominent figure in the Russian business world, has emphasised the importance of their assessment of the average key rate for the year in their business plan, regardless of the decision the central bank makes.
The Bank of Russia is considering a reduction of the key rate by either 100 or 200 basis points on September 12. This decision comes after a series of reductions, with the key rate last at 21% in October 2024 before the July 25 reduction, which saw a decrease of 2 percentage points, to 18%.
Andrei Ganin, director of the CB's monetary policy department, reported that the possibility of lowering the key rate in 2025 remains, but it is "not predetermined." Ganin also mentioned potential "pauses between reductions" in the key rate, suggesting a cautious approach.
Ganin emphasised that the Bank of Russia will take further decisions cautiously, considering pro-inflationary risks and up-to-date data. He also noted an increase in inflationary expectations and uncertainty about the federal budget deficit.
Despite the possibility of a slowdown in Russian economic growth, Dmitry Pyanov suggests a more cautious step due to the current pace of movement above the target base "inflationary" components. Pyanov believes it is important "not to freeze" the economy now.
In 2026, the Bank of Russia expects the key rate to be 12-13%. The GDP indicator is very close to the lower boundary of the 1-2% range set by the CB, with the GDP growth in the second quarter being 1.1%, instead of the expected 1.8%.
Corporate lending is accelerating, which is reflected in the dynamics of money supply. However, the impact of these trends on the economy as a whole is yet to be fully understood.
Maxim Topilin, another economic expert, has also weighed in on the matter, stating that he cannot choose between the two options for reducing the key rate yet.
In summary, the Bank of Russia is set to make a decision on the key rate on September 12, with various opinions suggesting a cautious approach due to the current economic situation and inflationary risks. The exact outcome remains uncertain, with the possibility of a reduction of either 100 or 200 basis points on the table.
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