Bank of Russia May Pause Key Rate Cuts Amid Inflation Concerns

MOSCOW, July 20. /TASS/. The Bank of Russia may pause its key rate-cutting cycle at its upcoming meeting, Vladimir Yeremkin, a senior researcher at the Structural Research Laboratory of the Presidential Academy's Institute of Applied Economic Research (IAER), told TASS.

"At the next meeting, there is a high probability that the Central Bank will pause its rate-cutting cycle to assess how seriously recent events in the domestic fuel market have impacted inflation dynamics," he said.

Furthermore, the expert believes the regulator's decision could be influenced by rising inflation expectations, which may prompt the Bank of Russia to upwardly revise its year-end inflation forecast.

In early July, Alexander Shokhin, head of the Russian Union of Industrialists and Entrepreneurs (RSPP), told TASS that at its July 24 meeting, the Central Bank would likely either hold the key rate at its current 14.25% or cut it to 14%. He added that raising the rate due to temporary pro-inflationary factors would be a mistake.

In late June, Sberbank CEO Herman Gref also stated during the lender's annual general meeting that the Russian economy was already "overcooled" and that the regulator needed to lower the key rate.

Meanwhile, Bank of Russia Governor Elvira Nabiullina said in an interview with Vesti on the sidelines of the Financial Congress that room for further rate cuts remains. The Central Bank chief emphasized that the timing and pace of any cuts would depend entirely on economic developments.