MOSCOW, October 22. /TASS/. The Board of Directors of the Bank of Russia may consider keeping the key rate at 17% per annum at the forthcoming meeting on October 24, the majority of experts polled by TASS say.

The growing inflation pace in September and early October, the next historical minimum of the unemployment rate, further acceleration of the rise in salaries and fuel costs, new vehicle scrap fee rules and the increase of VAT since the next year will have the proinflationary effect, analysts said in their forecasts.

The Bank of Russia lowered the key rate by one percentage point at the previous meeting, citing that stable indicators of the current price growth did not change materially and largely remained above 4% in annual terms.

Vigilance in focus

The majority of experts concur that the decision to keep the key rate at the level of 17% will be made this Friday. "The caution of the Bank of Russia can be related to a more stimulating nature of the budgetary policy than expected before, plans to increase the VAT and other one-off proinflationary factors - the change in the vehicle scrap fee calculation methodology and the fuel price hike. Before continuing key rate lowering, the regulator would want to make sure that the effect of these factors on inflation and inflation expectations is limited in its nature," Igor Rapokhin of SberCIB Investment Research said.

Growth of flash indicators of inflation during the fall to 7-8% of the seasonally adjusted annualized rate from 3-4% in May-August, consistently high inflation expectations of the population (12.6% and the business (19.6%) in September, and the strained labor market are arguments favoring a pause, Evgeny Zhornist from Alfa-Capital said. Furthermore, corporate lending revitalized since July (+1.4% in July and +1.6% in August), although its dynamics geared down again in September (+0.6%).

There are some positive factors at the same time. The ruble rate became more stronger as compared to the level before the past meeting and monetary conditions toughened even without interference of the Central Bank.

Scenario for optimists

Some experts are more optimistic and consider the possibility of the key rate to be slashed by 50-100 basis points. The contraction of economic activity may facilitate key rate reduction, Pavel Biryukov from Gazprombank said. "GDP growth in the third quarter of 2025 may drop to 0.5% year on year after 1.1% in the first quarter of 2025, and inflation as of the end of September is below the forecast of the Central Bank - 6.7% of the seasonally adjusted annualized rate against 8.5% with the regulator. The updated draft budget called the "disinflationary" one by the Central Bank," may be an additional argument," the expert stressed.