Economist predicts key rate cut in July

If inflation in Russia continues to decline, the Central Bank (CB) will lower the key rate in July, but by no more than two percent, according to Anatoly Bazhan, head of the economic research department and chief research fellow at the Institute of Europe of the Russian Academy of Sciences . The economist told Lenta.ru about this.

"It's hard to say by how much, but if inflation drops significantly, then, of course, the Central Bank will certainly lower the rate. (...) I think no more than two percent," Bazhan said.

To a large extent, the existing inflation in Russia is connected with world market prices, because the dynamics of prices for foreign goods that come to us influences inflation within the country, the economist explained.

"Until now, the inflation dynamics on the world market have been quite high, somewhere around six percent. It is necessary to predict what will happen with world market prices in July. World market prices still largely depend on the international situation. The increase in military potential, for example, in Europe, also has an impact on world market prices," Bazhan concluded.

Earlier, the head of the Central Bank (CB) Elvira Nabiullina reported that the regulator will consider the option of further reducing the key rate at the next meeting of the board of directors in July if the emerging trends in the domestic market continue. It is planned that this will happen if the trend of slowing growth rates of consumer prices in Russia continues and tensions in the labor market decrease.

Following the June meeting, the Central Bank's board of directors lowered the key rate by 100 basis points - from a record 21 to 20 percent per annum.