Central Bank of Russia could consider cutting rate more than 1 pp in July, decision to depend on data - Zabotkin

ST. PETERSBURG. June 30 (Interfax) - The Central Bank of Russia could at its July meeting consider lowering the key rate by more than 1 percentage point if incoming data are in favor of this, CBR Deputy Governor Alexei Zabotkin told journalists.

"The decision at the July meeting will be dictated by the degree of confidence we have that inflation is moving along a path that ensures a return to 4% inflation in 2026. If the data that come in by then - on the economy, the labor market, credit activity, inflation itself, inflation expectations - indicate that it will take a more significant cut to slow inflation down to 4%, then this option, too, will be considered. Such a decision will depend on the balance of opinions," Zabotkin said on the sidelines of the Bank of Russia Summer School.

He said the Central Bank might consider more significant reductions than at the June meeting.

The CBR at its June meeting considered holding the key rate at 21% and lowering it by 50 or 100 basis points, opting in the end to lower it 100 bps to 20%.

Zabotkin said the key rate path would depend whether the incoming data validate the forecast for inflation to reach the 4% target in 2026 or raise doubts about it.

"Pauses [in rate reduction] are quite possible if there are grounds to believe that a longer period of tightness is needed to achieve this goal. These are not exceptional events of some sort," he said.

The Central Bank's April forecast is for an average key rate of 19.5%-21.5% in 2025 and 13%-14% in 2026. Inflation is expected to be 7%-8% in 2025 and 4% in 2026.

"The general direction is downward rate movement if inflation is slowing. That is, if we have already achieved sufficient tightness for inflation to slow, then the rate will come down," Zabotkin said.

The Central Bank of Russia will unveil an updated macroeconomic forecast following its rate-setting meeting on July 25.

"If the inflation forecast is revised downwards, then the key rate path will probably be adjusted accordingly," Zabotkin said.