Central Bank interest rate to persist at 21%, according to VTB predictions
Got the scoop on VTB's take on CBR's future key rate
VTB's First Deputy Chairman, Dmitry Pyanov, dropped a hint about the Central Bank of Russia's (CBR) potential future monetary policy. Here's the lowdown:
Pyanov hinted that VTB expects the current key rate of 21% to stay put at the June 6 meeting, but the message on monetary policy moving forward might get a tad softer. He proposed, "We will assess the need to cut the key rate in the second half of 2025" as a possible verbal cue.
Positive indicators that might sway the CBR towards easing monetary policy include a cooling growth rate, a strengthening ruble, and decreasing inflation. However, there are factors that contradict this trend, such as stable inflation expectations, looming tariff indexation, and a tense labor market.
VTB remains cautious with its projections, predicting a key rate cut is possible during the last CBR meeting of the year. But, don't forget, this bank ain't no crystal ball.
Let's take a quick look at the broader picture. The CBR aims to bring inflation down to 4% by 2026, but they're keeping a tight grip on monetary conditions to meet their targets[2][3]. Domestic demand continues to outpace supply, necessitating a thread of caution in monetary management. Geopolitical tensions could potentially ease disinflation temporarily but have less of an impact in the long run[2]. Tighter lending conditions are also expected to slow down domestic demand and inflation[2].
In essence, the CBR's focus remains on controlling inflation and managing economic growth amid geopolitical uncertainties. Keep your eyes peeled for more updates from VTB and the CBR. Cheers!
In line with VTB's projections, the potential for a softened monetary policy might be on the horizon for the Central Bank of Russia (CBR) in the second half of 2025, possibly leading to a reduction in the key rate. This strategic change could be influenced by positive indicators such as a cooling growth rate, a strengthening ruble, and decreasing inflation.
