MOSCOW, June 4. /TASS/. The key interest rate should be reduced to 19%, although even a cut to 20% would serve as a signal of a return to the trajectory of normal economic functioning. The high key rate has a negative impact on business and slows economic growth, President of the Russian Union of Industrialists and Entrepreneurs Alexander Shokhin told TASS.

"Even a symbolic reduction of 100 basis points to 20% is important, as it would serve as a marker indicating a return to the trajectory of normal economic functioning. At the same time, a reduction of the key rate to 19% would not only outline a path of gradual easing but would also immediately create the conditions necessary to maintain economic growth at an acceptable level. It would minimize the risks of growing arrears and even bankruptcies caused by the high cost of working capital and increased debt service payments. Furthermore, it would make it possible to restart the investment cycle, since its suspension could result in the country failing to resolve the supply-side constraints that continue to drive inflation, not to mention jeopardizing efforts to achieve technological sovereignty," Shokhin stated.

According to him, the potential budgetary savings generated by a lower rate, resources that could be directed toward support measures, should also be taken into account.

"There is, therefore, a high level of interest in reducing the rate, not just from business, especially given that there are strong and well-founded economic arguments in favor of such a move," Shokhin added.