The Bank of Russia is considering a more substantial key rate reduction at its July meeting, according to Deputy Chairman Alexei Zabotkin. This decision hinges on incoming economic data and the central bank’s assessment of inflation trends.

The potential for a deeper cut than the one implemented in June will depend on the central bank’s confidence that inflation is on track to reach its 4% target by 2026. The decision will be based on an evaluation of economic data, labor market conditions, credit activity, current inflation, and inflation expectations.

Zabotkin noted that if these indicators align with a more significant rate cut to achieve the 4% inflation goal, that option will be seriously considered.

Furthermore, the central bank will update its key rate forecast, extending it to 2028, with the announcement scheduled for July 25th. A downward revision of the inflation forecast would likely lead to a corresponding adjustment in the key rate trajectory.

In early June, the Bank of Russia reduced the key rate for the first time in almost three years, decreasing it by one percentage point from 21% to 20%.