The Bank of Russia lowered its key interest rate from 21% to 20% on June 6, marking the first rate cut in nearly three years. This decision follows a period of holding or raising the rate and comes after government officials expressed support for easing monetary policy.

VTB Bank executives had differing predictions about the rate decision, leading to a friendly bet. The market reacted positively to the announcement, with the Moscow Exchange index rising. Experts suggest the rate cut signals support for the construction industry, although further systematic improvements are needed.

The decision to lower the key rate was influenced by a decrease in oil and gas revenues, necessitating a focus on reviving other sectors of the economy to compensate for reduced tax revenues. While the regulator noted decreasing inflationary pressure and a gradual return to balanced economic growth, future rate decisions will depend on the stability of inflation reduction.

The Central Bank indicated a cautious approach, suggesting possible pauses in future rate cuts and not ruling out the possibility of a rate increase. The current rate of price growth has slowed, with non-food product prices being most affected by the tight monetary policy.

Following the rate cut, banks are expected to lower rates on medium- and long-term deposits, while competition for short-term deposits may increase. Sberbank has already announced rate reductions on mortgages, consumer loans, and deposits. Other banks will likely follow suit.

Experts predict interest rates on deposits may decrease by an average of 2-3 percentage points. Although rates on retail loans will likely remain high, developers may be able to improve project economics, providing more favorable conditions for clients.