The scope for further cuts to the key interest rate has narrowed, as pro-inflationary risks have intensified, according to the summary of the Bank of Russia’s June 19 policy discussion.
Meeting participants highlighted the growing influence of fiscal policy and developments in the fuel market. In the central bank’s assessment, maintaining the primary structural budget deficit through 2029 would amplify the fiscal impulse, while higher motor fuel prices could feed through into higher costs and prices across a broad range of goods and services. Over the medium term, pro-inflationary risks continue to outweigh disinflationary pressures.
The central bank has not ruled out additional rate cuts, but stressed that any such decisions will hinge on inflation dynamics and the expectations of households and businesses. The regulator acknowledged that bringing inflation back to target may require a higher interest-rate trajectory than envisioned in its April forecast.