Weak GDP growth, change in fiscal rule, strong ruble expected to push CBR to cut rate faster - VTB

MOSCOW. March 26 (Interfax) - The trajectory of the Central Bank of Russia's (CBR) key interest rate in 2026 might turn out to be lower due to weak GDP growth, a change in the oil cut-off price in the fiscal rule and the stronger ruble, but so far the CBR's monetary policy decisions are consistent with VTB's forecast, the state bank's first deputy CEO, Dmitry Pyanov said.

"We believe, I personally believe that there are three factors that might accelerate the movement of the trajectory for cutting the key rate down, lower than our baseline scenario," Pyanov told reporters.

The first factor in favour of cutting the rate more aggressively is weak economic activity. The Economic Development Ministry estimated that GDP contracted by 2.1% in January, and the CBR is forecasting growth of 1.6% for the first quarter of 2026, Pyanov recalled.

The second important factor is the change in the base oil price in the fiscal rule and the Finance Ministry's statement that it will take place in 2027 at the earliest.

"This can be used as an additional argument, since a lower price will reduce the share of budget spending and, due to the fiscal impulse, GDP and could be grounds for the faster reduction of the key rate," Pyanov said.

The third factor is the stronger ruble. "I think that now all analysts will revise the ruble exchange rate [forecast] to a stronger one in 2026, because an ideal tailwind is apparently taking shape for the ruble," Pyanov said, citing higher oil prices and the postponement of the change in the fiscal rule's cut-off price to 2027 from this year as initially expected.

However, there is one nuance, which is what will happen with deferred forex purchases due to the Finance Ministry's suspension of regular transactions under the fiscal rule and whether they will be correlated with purchases due to high oil prices, he said.

"Strategically, a positive scenario is nonetheless taking shape for the ruble for 2026. This can also be an anti-inflationary factor," Pyanov said.

"These three factors will determine whether the trajectory shifts lower than we expect, but so far everything is going according to our baseline scenario," Pyanov said.

The CBR cut its key rate by another 50 basis points to 15% in March.