UrBC, Yekaterinburg, October 28, 2016. Provided inflation rate expectations carry on diminishing, Russia’s Central Bank is likely to keep bringing the key rate down next year, the Ural Bank for Reconstruction & Development’s Holistic Risk Management Director Dmitri Zavyelov says.

‘The national inflation rate went down by 0.4% in September 2016 and thus amounted to 6.4%. The Central Bank’s analytical report states that people’s inflation expectations have been going down. For one, the share of those expecting the inflation to get worse dropped from 21% down to 18%, while the share of respondents who believe the inflation rate will remain the same as before rose from 51% to 56%. At the same time, the median inflation expectations actually rose,’ says Zavyelov.

According to the executive, this signals unstable inflation expectations, which is why the Central Bank’s moderately strict lending and monetary policy seems justified.

‘If all these trends hold, the regulatory body will probably keep bringing the key rate down in 2017. One should bear in mind, however, that there are external factors (such oil prices) at play in addition to internal ones (such as inflation and inflation expectations). Based on analysts’ forecasts, oil prices are expected to remain at current level (around $50 per barrel) until the end of the year, with no drastic fluctuations,’ Zavyelov says.