MOSCOW, July 22. /TASS/. The Board of Directors of the Bank of Russia is most likely to keep the key interest rate unchanged at 14.25% per annum at its July 24 meeting, according to 18 of the 22 market participants surveyed by TASS. Three respondents said the regulator could either leave the rate unchanged or lower it to 14%, while only one viewed a 25-basis-point cut as the baseline scenario.
Experts noted that the room for further monetary easing has narrowed due to accelerating inflation driven by rising fuel prices, higher inflation expectations, a looser fiscal policy, and money supply dynamics. At the same time, slowing core inflation and signs of an economic slowdown continue to support the case for a rate cut.
At its previous meeting in June, the Bank of Russia lowered the key rate by 25 basis points for the fourth consecutive meeting, bringing it to 14.25% per annum. At the time, the regulator noted some moderation in underlying price growth but emphasized that lending had accelerated again and fiscal policy had become more expansionary than previously expected.
Earlier in July, Deputy Governor of the Bank of Russia Alexey Zabotkin said the regulator could not ignore developments in the fuel market and inflation expectations. At the same time, the central bank expects the situation to normalize and will assess the extent to which higher fuel prices affect household and business inflation expectations. According to data published by the Bank of Russia on July 21, one-year inflation expectations among households rose to 14.7% in July from 12.4%, while perceived inflation increased to 15.1% from 14.2%.
