Feeding the Economic Furnace: Shokhin's Forecast for Bank of Russia's Key Rate
RSPP leader suggests potential cut in key rate to range between 13%-15% by year's end
Wake up, Russia! Get ready to crank up the heat, 'cause Alexander Shokhin, the big shot Chairman of the Russian Union of Industrialists and Entrepreneurs, reckons the Bank of Russia's key rate's gonna see a significantly hotter temperature by 2025.
According to him, the key rate will sizzle down to around 18% by September, and then drop like a stone to a scorching 13-15% by the New Year. That's quite a drop from the current 20% rate, and it's about to bring some serious change to the table.
So why's Shokhin getting all heated up about this? Well, it's pretty simple, really. Inflation figures are looking mighty fine, making it a favorable climate for a rate adjustment. And it ain't just the economy—it's the whole shebang—he's talking about here. He says the economic conditions in some industries might be showing signs of hypothermia, not just cooling down.
"I reckon we should crank it down to 18% at least," he said, "and by the end of the year, I'm thinking we should be cookin' at 13-15%. That's economic and financial balance for ya." He went on to say that such figures would be ideal for both the business community and the federal budget.
But wait, there's more! Shokhin stressed that the key rate needs to be lowered while maintaining inflation numbers within acceptable boundaries. According to him, there's a formula that the rate should be twice the inflation rate. "If we're sticking to that equation, and by the end of the year, the Ministry of Economic Development's forecast is 7-7.5% for inflation, and the CB's forecast is similar, then logically, the rate shouldn't be more than 15%."
As of June 23, inflation in Russia slipped to a relatively cool 9.48%, comparing to 9.59% the week prior. It seems like the country's inflation beast is slowly being tamed.
Previously, Shokhin advocated for a rate reduction to stop a wave of mass bankruptcies, manage rising non-payment risks, and steer the economy back on the growth track.
Anatoly Aksakov, Head of the State Duma's Financial Market Committee, predicts that the CB might serve up another rate cut during its board meeting on July 25. The Bank of Russia's board of directors already began the fireworks on June 6, when they reduced the key rate for the first time in three years, going from a fiery 21% to a still hot 20% annual percentage. Central Bank Governor Elvira Nabiullina previously announced that the key rate could only be lowered as inflation rates cooled down.
So there you have it, folks. Keep your economic pulse steady, because things are a-changing in Russia!
Moscow, Natalia Petrova
© 2025, RIA "Novy Day"
The economic forecast by Alexander Shokhin suggests a significant decrease in the Bank of Russia's key rate, plausibly reaching 13-15% by the end of 2025, which could bring substantial changes to various industries and the federal budget, particularly in finance and business. Despite the steady decline in inflation, it's crucial to maintain such rate changes within acceptable boundaries for a balanced economic and financial system.
