The Central Bank of Russia has lowered the key interest rate to 20% per annum. This decision, announced by the head of the Central Bank, Elvira Nabiullina, comes after a previous meeting where maintaining the rate at 21% or lowering it were considered.

Nabiullina emphasized that the Central Bank will continue to maintain tight monetary conditions despite the decrease. She stated that if inflation ceases to decline steadily or begins to rise, an increase in the key rate is possible.

The decision to lower the rate was influenced by a significant slowdown in inflation due to the previously high key rate. Nabiullina noted growing confidence in the sustainability of disinflationary processes, despite varying price increases across different goods and services. The dynamics of inflation and economic activity provided sufficient grounds for lowering the key rate.

While two options were considered—maintaining or lowering the rate—the possibility of an increase was not initially discussed. Nabiullina warned that the Bank of Russia would maintain tight monetary conditions for an extended period.

The Central Bank aims to reduce price growth to 4% per annum, a target it expects to achieve by 2026. Nabiullina clarified that lowering the rate does not necessarily depend on reaching the 4% inflation target. She also indicated that the inflation forecast, currently near the lower limit, is likely to be revised downwards in July, based on data from the first four months of the year and the current operational picture.

Nabiullina explained that the Central Bank’s goal is to slow down inflation and allow the real sector of the economy to develop. She noted that the current economic conditions make this possible. The primary concern is that inflation erodes the economy’s potential.