The Board of Directors of the Bank of Russia has again decided to reduce the key interest rate by 200 bp - from 20% to 18% per annum.
The decision coincided with the expectations of the majority of analysts who predicted such a decrease in the interest rate, TASS commented.
At the same time, some experts allowed a larger step of 300 bp. reduction (up to 17%). A number of economists, on the contrary, did not rule out a more modest step of 100 bp. to 19%.
At its previous meeting, on 6 June, the Governing Council decided for the first time in more than 2.5 years to cut the key interest rate by 100 bps - from 21% to 20% per annum.
Previously, the rate was last reduced in September 2022 - from 8% per annum to 7.5% per annum.
"Current inflationary pressures, including persistent inflationary pressures, are weakening faster than previously forecast. Domestic demand growth is slowing down.
The economy continues to return to a balanced growth trajectory, the press release on the results of the meeting of the Central Bank's Governing Council on Friday said.
The Bank of Russia also notes that in the medium term, pro-inflationary risks prevail over disinflationary ones.
The main pro-inflationary risks are still associated with the prolonged persistence of the Russian economy's upward deviation from the balanced growth trajectory and high inflation expectations, as well as with the deterioration of foreign trade conditions.
"A further decline in global economic growth and oil prices in the event of an intensification of trade disputes may have a pro-inflationary effect through the dynamics of the ruble exchange rate. Geopolitical tensions remain a significant factor of uncertainty. Disinflationary risks are associated with a more significant slowdown in credit growth and domestic demand under the influence of tight monetary conditions," the press release said.
The central bank kept the interest rate at 21% per annum until June for four consecutive meetings, after raising it by 200 basis points from 19% on October 25 last year. At the meeting on December 20, 2024, a decision was made to keep the rate at this level, although most analysts expected an increase, and then it kept the rate at the same level on February 14, March 21 and April 25.
The next meeting of the central bank's Governing Council on the interest rate will be held on September 12.