Russian Central Bank could begin reducing key rate at end of 2025, start of 2026 - VTB's Kostin

MOSCOW. Dec 9 (Interfax) - The Central Bank of Russia could begin reducing the key rate at the end of 2025 or at the beginning of 2026, VTB President and Board Chairman Andrei Kostin said.

"I think that the Central Bank is currently trying rather harshly to convey to businesses and households that it intends to retain a high key rate, and I generally respect the Central Bank's management highly for this, because they have assumed full responsibility for the inflation program in this regard. Therefore, most analysts believe that the rate will possibly increase to 23% per annum. We believe that it could either remain high for all next year, because inflation should be around 6.5%-7% next year according to our estimates, or it could begin to decline toward the end of the year. These possibilities also exist if the Central Bank's program is sufficiently successful," Kostin said on Rossiya 1 TV.

"Overall, I think that if the trend changes and the Central Bank sees that inflation has decelerated, then we could expect a cut in the rate. However, I am afraid that this would not happen before the end of next year or even early 2026," he said.

The Central Bank's key rate is currently 21% pa. Many market participants expect that the regulator is likely to hike the key rate to 23% pa at the year's final meeting of the board of directors on December 20. Central Bank Governor Elvira Nabiullina has said that the regulator would consider raising the key rate in December, though the decision depends on many factors and is not predetermined.