The Central Bank of Russia (CB) is poised to begin easing monetary policy gradually over the next six months, a move that would hinge on inflation easing toward a 4% target and on avoiding any sustained pressure on the ruble. This outlook is discussed in depth by Pavel Samiev, the managing director of the analytical firm BusinessDrom, as reported by Lente.ru. Samiev emphasizes that a measured pace is key; rapid cuts could destabilize expectations, while gradual reductions would help the economy adjust to lower borrowing costs without triggering unwelcome currency volatility.
He explains that the central bank appears to be targeting a path where inflation gradually retreats to 4 percent, which would in turn create room for easing the policy rate. The forecast suggests a cycle of rate reductions starting a little over six months from now. The proposed pace is cautious rather than abrupt, reflecting a desire to maintain macroeconomic stability while supporting growth in a slowing external environment. This approach would align with a broader strategy to manage risks associated with inflation dynamics and currency movements in the mid-term horizon.
According to Samiev, the magnitude of easing is unlikely to be sharp. A modest cut of 1 to 2 percentage points is considered plausible under these conditions, provided inflation trends stay on track and the ruble remains relatively insulated from sudden shocks in the foreign exchange market. The outlook assumes that price pressures will not intensify significantly, allowing policy makers to calibrate the neutral rate with gradual precision rather than dramatic steps that could unsettle markets.
Samiev further notes that the current landscape appears conducive to such a scenario because there are few immediate drivers that would push inflation higher or provoke pronounced volatility in currency markets. While a marginal rise in inflation could occur during the autumn months, these changes are not expected to be large enough to derail the planned easing path. In this context, a measured rate cut would be deemed acceptable by the central bank and market participants alike, balancing growth considerations with the need to keep price stability intact.
Meanwhile, on May 31, a Deputy Governor of the Central Bank, Alexey Zabotkin, suggested that the bank may revisit its neutral rate range. He indicated that an expansion of the neutral rate corridor from the current 5-6% could be contemplated following the July Board meeting, signaling a potential shift in how the bank defines its policy stance in the near term. This potential adjustment would reflect ongoing assessments of inflation dynamics, global financial conditions, and domestic economic resilience as the bank calibrates its reaction function for the post-pandemic environment.