SOCHI, September 29. /TASS/. Further decisions on the key rate will be made based on the evolution of the situation - as inflation stabilizes at the 4% target level, the rate can be reduced, Governor of the Bank of Russia Elvira Nabiullina said on Friday.

"Everything will be determined by how the situation unfolds. There is a great deal of uncertainty. We will examine the impact of previous policies on inflation, and our fiscal policy will become more specific. <…> As soon as inflation returns to our target range, we will be able to lower the rate to the so-called neutral range (5.5 - 6.5%). We believe we will get there by 2026," she said.

Nabiullina said earlier one of the reasons for the Bank of Russia to raise the key rate was the weakening of the ruble. "Today we decided to raise the key rate to 13% per annum. The steps taken since July to raise the key rate are a response to inflation risks, including the influence of the exchange rate," she said.

The Bank of Russia updated its macroeconomic forecast and, based on it, confirmed the level of the key rate, which, according to Nabiullina, is necessary to achieve the inflation target of 4% by the end of next year. "In the current environment, returning to the target will require a long period of tight monetary policy," she noted.

Nabiullina added that the Bank of Russia will keep its key rate at a higher level until inflation stabilizes. "In the base scenario, the average key rate will be 13-13.6% for the rest of this year and 11.5-12.5% per annum next year. This indicates that we will keep the key rate at a higher level as long as it is necessary to achieve a sustainable decline in inflation and inflation expectations," she said.

She noted that the Bank of Russia considered three options for the key rate, including keeping the figure at the same level or raising it by more than 100 basis points.

Earlier, the Bank of Russia raised the key rate by 100 basis points to 13% per annum and said it would consider the feasibility of its further increase at upcoming meetings. "Significant proinflationary risks have crystallized, namely the domestic demand growth outpacing the output expansion capacity and the depreciation of the ruble in the summer months. Therefore, it is required to additionally tighten monetary conditions to limit the upward deviation of inflation from the target and return it to 4% in 2024. The return of inflation to the target and its further stabilization close to 4% also implies that tight monetary conditions will be maintained in the economy for a long period," the regulator said. The Bank of Russia Board of Directors will hold its next rate review meeting on October 27.