MOSCOW, July 1. /TASS/. Demand for cash has increased noticeably in recent months, according to the Bank of Russia’s summary of discussions on the key interest rate.
The central bank did not rule out a higher path for the key interest rate over the medium term. The regulator also noted that oil prices may remain elevated in the near term.
TASS has compiled the key takeaways from the summary.
Ruble strength
The strong ruble will continue to have a "disinflationary effect" and receive sustained support from structural factors: "It is supported not only by temporary external factors, but also by cyclical and structural factors of a more lasting nature. The pass-through of the global commodity price shock and higher logistics costs into domestic prices is likely to be weaker than this effect."
Key interest rate
A higher path for the key interest rate over the medium term cannot be ruled out in order to bring inflation back to target: "Taking into account the available data and the materialization of pro-inflationary risks, stabilizing inflation at the target over the medium term may require a higher key interest rate path than projected in the April forecast."
Cash demand
- Demand for cash has "increased noticeably in recent months."
- The increase in demand was primarily linked to mobile internet disruptions and the response of economic agents to tax changes: "This was primarily associated with mobile internet outages and also reflected the response of economic agents to tax changes."
- The rise in cash demand remained "within the historical range," while cash’s share in the money supply increased "only slightly and remained below the levels seen at the end of 2024."
- The shift of funds from bank accounts into cash changes the composition of the money supply but not its overall volume and, by itself, does not create additional demand for goods and services.
Oil prices
- Oil prices are likely to remain elevated in the near term and decline gradually: "Most participants agreed that oil prices are likely to remain elevated in the near term and decline gradually. The drawdown of inventories during the conflict may delay the oil market’s transition to a surplus."
- "The high prices seen during the previous period encouraged the expansion of production capacity and increased oil supply in other regions, allowing depleted inventories to be replenished more quickly than expected. At the same time, the consequences of the commodity price shock for the global economy could weaken oil demand. As a result, market rebalancing may occur more rapidly."
Banks’ loan portfolios
- Some deterioration in the quality of Russian banks’ loan portfolios was noted: "The quality of loan portfolios remains acceptable, although it has declined somewhat. The financial position of the corporate sector as a whole remained resilient."
- The debt burden of the largest companies has increased somewhat but remains at historically low levels: "The share of non-performing loans has remained close to 4% over the past year and a half, and among large companies it has even declined slightly since the beginning of 2025. More noticeable deterioration was observed in the small and medium-sized enterprise segment, although the overall volume of problem debt remained limited and did not pose systemic risks."
- Lowering the key interest rate will reduce companies’ interest expenses because more than two-thirds of corporate loans are issued at floating interest rates: "This will support the financial stability of borrowers."