The Central Bank of Russia has lowered its key interest rate to 20% per annum, citing a significant slowdown in inflation as the primary reason. Despite this decrease, the regulator plans to maintain tight monetary conditions for an extended period.

According to Elvira Nabiullina, head of the Central Bank, the decision was influenced by the fact that price growth has slowed, and the bank has become more confident in the stability of disinflationary processes.

At the last meeting of the Board of Directors, two options were under consideration: maintaining the key rate at 21% or lowering it. There was no discussion of raising the rate at that time.

Nabiullina also warned that if inflation stops declining steadily or begins to rise, an increase in the key rate is possible.

The Central Bank aims to reduce price growth to 4% per annum, but it anticipates achieving this goal only in 2026. However, Nabiullina clarified that it is not necessary to wait for 4% inflation to begin lowering the rate.

The Central Bank’s main objective is to slow down inflation and allow the real sector of the economy to develop. Inflation is currently developing near the lower limit of the regulator’s forecast, and a more precise forecast will be provided in July.