MOSCOW, July 25. /TASS/. Sustainable inflation expectations of households significantly limit the scope for reducing the key rate, Russian Central Bank Governor Elvira Nabiullina said.

"If people are not too inclined to believe in a reduction in inflation this will spur price growth, this will reduce the room for reducing the key rate," she told a press conference following the board meeting on the key rate.

Current inflation dynamics still retain certain room for maneuver, with its scale directly depending on the change in inflation expectations in coming months, Nabiullina added.

Earlier on Friday the Bank of Russia cut its key rate by 2 percentage points to 18% per annum, saying that inflationary pressures are declining faster than projected while domestic demand growth is slowing. The Central Bank will maintain monetary conditions as tight as necessary to return inflation to the target in 2026. Changes in the fiscal policy parameters may require an adjustment in the monetary policy pursued, the regulator said.