ST. PETERSBURG, October 29. /TASS/. The Bank of Russia may pause its key rate cuts or reduce it by 0.5 percentage points by the end of the current year, Head of the Russian Union of Industrialists and Entrepreneurs (RSPP) Alexander Shokhin told reporters on the sidelines of the Russian Industrialist forum.
"The Central Bank will act very cautiously, because its monetary policy will likely factor in the VAT increase and the inflationary consequences of this decision. Therefore, if in early September I personally believed it would be 14% (by the end of the year), now, at best, a reduction of another 0.5 percentage points will be possible," Shokhin said.
He recalled that Bank of Russia Governor Elvira Nabiullina recently announced that the rate cut cycle would continue into 2026.
"But she didn't say what rate, which is natural. And it won't be fast, apparently. And the Central Bank is already adjusting its forecasts," Shokhin said.
He recalled that while a month and a half ago the Central Bank projected an average rate of 12-13% in 2026, it has now raised its forecast to 13-15%.
"I think there's a chance of a 0.5 percentage point reduction by the end of the year, but I don't think it will happen. Next year will depend on inflation trends and inflation expectations," the RSPP head added.
"The main thing is that, given a fairly tight budget and a strong ruble, the rate should be lowered. <...> The correlation is that the tighter the budget, the softer monetary policy, in theory, can be. At the same time, a strong ruble, a fairly high rate, and high inflation can, of course, lead to economic overcooling, which no one wants: neither the Central Bank, nor the government, nor, of course, businesses," Shokhin said.
On October 24, the Bank of Russia decided to reduce the key interest rate by 0.5 percentage points, bringing it to 16.5%, stating that it will maintain a level of monetary policy strictness necessary to return inflation to its target.