The question of the monetary policy trajectory has once again come to the forefront of the economic agenda. Judging by signals from the Eastern Economic Forum, the Russian market is anticipating potential easing: discussions have centered around the possibility of lowering the key rate as early as the September meeting of the Central Bank's board of directors.
Officials and representatives of the largest banks are demonstrating rare unanimity in assessing the direction. On one hand, the Deputy Prime Minister links the prospect of further rate cuts to a slowdown in annual inflation, which should stimulate investment activity. According to estimates at the end of August, the annual figure slowed to approximately 6.3%, laying the groundwork for a revision of the tight policy. On the other hand, the head of the largest state-owned bank expects a gradual but unidirectional downward movement, emphasizing that the peak of the cycle has already passed and there will be no return to hikes.
Consensus forecast: a pause or a step down?
Analysts from leading financial institutions agree that at the September 11 meeting, the regulator will face a choice between holding the rate at 14% and cutting it by 25 basis points to 13.75%. The arguments in favor of a pause appear substantial: seasonally adjusted inflation for August is estimated at around 7%, while the three-month figure accelerated to 10% after 8.4% in July and 5.4% in June. Such statistics are unlikely to allow the regulator to act aggressively.
However, one should not forget that the regulator's rhetoric has recently shifted toward acknowledging a slowdown in inflationary processes. There is a possibility that the Central Bank will decide to demonstrate its commitment to the easing cycle by making a symbolic step down. The suspense will remain until the very announcement of the decision.
What does this mean for markets and investors?
For the real sector of the economy, it is important to understand: a rapid reduction in the cost of credit will not occur. Even under an optimistic scenario, average market mortgage rates will remain in the range of 18–19%, and the full cost of unsecured consumer loans, including fees, will stay at 30–34%. A tangible improvement in the affordability of borrowed funds will most likely not happen before 2027.
In this regard, the strategy of locking in current high deposit rates appears most rational. The easing cycle will be protracted and cautious, so current yields on deposits may prove to be peak levels over the next two years.
My view: The market seems to be underestimating the likelihood of a pause in September. Inflation data, especially three-month trends, are still far from target levels. The regulator will most likely prefer to wait for a more sustained slowdown in price pressure so as not to risk devaluation expectations. However, the very signal that the tightening cycle has ended is already priced in, and that is the main positive for the debt market.