Shohin: Central Bank to Gradually Move Toward 13% Forecast by Year-End

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The Central Bank will continue its gradual easing of monetary policy and at the upcoming Board meeting, it will cut the key interest rate by 0.5 percentage points to 14.5%, predicted Alexander Shokhin, head of the Russian Union of Industrialists and Entrepreneurs (RSPP).

"In my personal view, since the acceleration of inflation that we are observing does not have such a stable trend, the Central Bank will probably move in small steps: it needs to demonstrate a trend towards lower rates and show the success of its policy, meaning monetary policy. On the other hand, it is clear that uncertainty is quite high. Therefore, with these small steps of 50 basis points, the Central Bank will probably move towards its forecast of 13% by the end of the year," Shokhin was quoted as saying by Interfax.

However, Shokhin stressed that lowering the key rate to 13% would not be sufficient. In his opinion, for the economy and investment recovery, it is necessary to reduce it to 10%.

"The fact that it is time to restore investments is also indicated by the GDP growth rates in recent months. They clearly indicate a worrying situation, suggesting that it will not be easy to revive the economy if it cools down significantly," the RSPP head noted.

• To remind, on March 20, the Central Bank cut the key rate by 50 basis points to 15% per annum. The next rate-setting meeting is scheduled for April 24.