Colleagues, good afternoon. I'm very happy to see you here at the Bank of Russia. We are about to begin the press conference by the governor of the Bank of Russia and the deputy governor Alexei Zabotkin. To begin with, we'll hear the statement by the governor following the board of directors meeting.
Good afternoon. Today we have made the decision to cut the key rate to 15.5% per annum. The economic situation has been developing generally in line with our baseline scenario. Price growth was rather high in January according to weekly data, but nonetheless, these do not change the overall picture. We consider that this is a redistribution of inflation between late 2025 and early 2026. Therefore, it would be correct to analyze the statistics for the last 3 months in total rather than in isolation. I will speak on this issue in detail later. The accumulated effect of tight monetary policy creates prerequisites for returning inflation to its 4% target. Thus, we have continued monetary policy easing.
I would not dwell on the reasons behind our today's decision. Firstly, inflation. We will receive full data for January tonight, but as is evident from weekly statistics, prices rose notably over the month. The main reason was the expected pass-through of increased VAT to prices. However, its effect has turned out to be stronger and more concentrated in January as compared to a similar tax rise in 2019. Most companies had decided not to pass on higher VAT to prices last year but did this in early 2026, which is why this factor had the strongest effect in January. The second factor is price dynamics in certain volatile categories. At the end of last year, fruit and vegetable price growth was atypically low, while in January, it accelerated significantly, primarily due to weather conditions, which pushed up greenhouse farms' heating costs. Moreover, because of increased excise duties, prices for petrol, tobacco products, and alcoholic beverages were rising faster as well in the beginning of the year.
For some experts, January weekly figures were a negative surprise, which they perceived as evidence of a persistent inflation acceleration. Nevertheless, according to our assessment, the slowdown at the end of the year and the acceleration in early 2026 were both transitory, with inflation being virtually carried over from 2025 to January 2026. Currently, annual inflation equals 6.3%, which is slightly below our forecast range of 6.5 to 7% that we expected at the beginning of the year. Thus, the dynamics of inflation are generally in line with our baseline scenario. Inflation has approached the same point through its slowdown in November-December 2025 and its subsequent acceleration in January 2026 rather than gradually. This redistribution was the reason for lower inflation as of the end of last year. Taking this into account, we have raised the inflation forecast for 2026 to 4.5 to 5.5%.
The question is whether the effect of the VAT increase has already faded or not. We would be able to give an unambiguous answer only after we receive data for the first quarter. So far we can see that price growth peaked over the first two weeks of January, waning in the second half of the month. I would like to reiterate that this estimate is based on incomplete weekly data. Additionally, I would like to note that full monthly data for January will show an acceleration in some measures of underlying inflation. For example, core inflation. Why? Because it is impossible to strip out all the effects of increased VAT from these measures of underlying inflation. Therefore, the acceleration should not be interpreted as an upward reversal in underlying inflation.
As for the risks to inflation stemming from second-round effects of the tax measures on inflation, these risks have not risen so far. This is evident from the dynamics of inflation expectations. In January, households' expectations remained unchanged while companies' price expectations declined considerably in February after their surge in January and even returned to the levels of last October. Overall, our baseline scenario still assumes that underlying inflation will be around 4% in the second half of the year.
Secondly, the economy. Full-year economic growth in 2025 was 1%, which is the upper bound of our forecast. These dynamics are generally in line with our expectations. The growth rate of economic activity has become more moderate. At the end of 2025, consumer demand expectedly picked up, which was due to the anticipated increases in the recycling fee and VAT. Consumers were seeking to make expensive purchases earlier before price rises. Accordingly, we expect the situation to reverse in the beginning of 2026, that is, consumer activity will moderate. These expectations are justified by, among other things, the high-frequency data of the Bank of Russia's monitoring of businesses for January and February.
As regards investments, companies were expanding them at a record pace over the past 3 years, which translated into new projects that are now at the commissioning stage. They will support the growth of the economy's potential even though investment dynamics are becoming more moderate. Their heterogeneity across industries remains high. Specifically, sectors related to exports and transportation expect investments to decline from the high levels of previous years. Nonetheless, there are also industries planning to increase investments. We have revised our 2026 investment forecast slightly downwards, but still expect positive dynamics.
The gradual slowdown in economic activity is accompanied by labor market easing. Unemployment stays at its record lows. However, the percentage of companies referring to staff shortages as their main constraint has notably contracted and is currently at the minimum level over the past 2 years. Furthermore, companies' wage indexation plans are now more modest than last year. All these are signs that the pressure put by the labor market on businesses' costs has been weakening. Our GDP growth forecast in the baseline scenario has remained unchanged. The key trends in the economy have generally stayed the same.
Thirdly, monetary conditions. Briefly, they have continued to ease while remaining tight. Although yields on federal government bonds and money market rates have edged up, real interest rates have stayed almost unchanged, taking into account the rise in market participants' inflation expectations. Loan and deposit rates have been declining in both nominal and real terms.
Corporate lending was expanding moderately in December 2025-January 2026 after the elevated growth rates observed in the autumn months. This was associated with the seasonal dynamics of budget spending. At the end of the year, companies usually receive payments under the fulfilled government contracts, while the beginning of the year is the time of advanced payments under the new contracts. During this period, certain enterprises' need for market loans temporarily decreases, although this is a normal seasonal effect. Contrastingly, retail lending accelerated slightly, predominantly driven by mortgages. The rise in the demand for housing mortgage loans was triggered by the expected tightening of the subsidized program terms. However, this was frontloaded demand and accordingly it may adjust downwards further on.
Household saving activity remains high while the structure of savings has been changing slightly. In addition to deposits, households' interest in other forms of savings, primarily financial market instruments, is increasing. This trend is quite natural at the stage of monetary policy easing. I would like to note that savings in the economy should be analyzed in total, taking into account both deposits and other instruments. Overall, the saving ratio stays high and the shifts in its structure do not change this fact.
Altogether, the accumulated effect of tight monetary conditions creates prerequisites for inflation to slow down to 4%. A few words about external conditions. Trade disputes and global market fragmentation have not had a considerable impact on the current situation so far, although the effects might still manifest themselves in the future. The world economy has continued to expand at a rather sustainable pace overall, supporting the demand for a wide range of commodities.
The situation in the crude oil market is different. Last year, oil supply was soaring, which has created a surplus in the global market and is now exerting pressure on prices. The situation for Russian exporters is complicated by sanctions. In view of the global market trends, we have reduced our forecast for oil prices for the next three years. Accordingly, we have also adjusted the forecast of the value of Russian exports. The ruble exchange rate has remained stable, although oil producers faced a decline in their export earnings. This was partially offset by earnings from other exports. The ruble remains attractive overall, which is and will be supported by the fiscal rule and sound monetary policy.
I will now speak about the risks. The balance of risks remains shifted towards pro-inflationary ones. The main pro-inflationary risks are still associated with a longer-lasting deviation of the Russian economy upwards from its balanced growth path and elevated inflation expectations. In January, household expectations did not respond to increased VAT. However, we cannot rule out the possibility of these effects in the upcoming months. Crude oil prices also involve serious risks if oil prices do not rebound from their current levels to those assumed in our baseline scenario. This might accelerate inflation through the exchange rate channel.
Pro-inflationary risks stemming from the labor market have somewhat weakened according to our assessment. As always, we put a particular focus on fiscal policy, both federal and regional policies. The parameters of fiscal policy enshrined in the law suggest its strong disinflationary effect this year. However, the situation might develop differently and deviate from the forecast. For example, in terms of non-oil and gas revenues. If the non-oil and gas deficit increases, we may have less room for cutting the key rate.
Disinflationary risks remain as well. The key one of which is a more considerable slowdown in domestic demand growth. Winding up, I would like to comment on our future decisions. At the upcoming meetings, we will assess the need for a further key rate cut. The baseline scenario assumes that the key rate will average 13.5 to 14.5% in 2026. Our updated forecast suggests that next year the key rate should be maintained at a slightly higher level of 8 to 9% for inflation to return to the target sustainably. This is needed because inflation expectations have been persistently heightened.
Over the past four years, when pro-inflationary shocks have been preventing inflation from declining to the target, inflation expectations have become persistently elevated. They will be decreasing rather slowly, including due to significant indexations of administered services and tariffs in the next few years. Taking into account all these factors, other things being equal, we should reduce the key rate more smoothly. This will make it possible to bring underlying inflation back to 4% and return the economy to a balanced growth path in the second half of the year. Thank you for your attention. I'm ready now to answer your questions.
Dear colleagues, please introduce yourself and identify your agencies. Rita, please.
Thank you very much. It's from TASS agency. I would like to put in some diversification into our routine questions about the issues on the table. Can one say that the inflationary peak has been passed and can one cautiously say that the peak of inflation expectations has been gone by as well?
Yes, indeed, the peak of inflation pressure we believe occurred in January. But speaking about sustainable inflation, we believe that the peak took place in December 2024. As regards the peak of inflation expectations, we are going to closely monitor this. Like I stated previously, the effect of higher taxation still may resonate with the inflation expectations, although we feel that the secondary effects are limited. But let's hope that the peak of inflation expectations has also been passed. But what is important to us is the speed of their decline because they remain at a high level and all throughout the previous year they stayed there.
Colleagues, please. Nastya in the second row.
Interfax. How can you explain today's softness on the part of the central bank and what kind of a mistake the market made even expecting the unchanged neutral rate? Some experts expected that the key rate would go down but they didn't expect that there would be a soft signal sent, only in overestimating the effect of VAT upon the general inflation. And they were scared by such statistics in the beginning of the year. And doesn't your assessment change of an aggregate impact of VAT upon the prices in between 6 to 7%?
Just give me a second. Now, as far as the analysts are concerned, I do not think that they were mistaken. If we take a look at the expectations in the middle of last year, indeed the ones towards the key rate staying at 3 to 1 prevailed. So during this week, new data came in, very substantial from the Russian office of statistics about the money aggregates covering January, also the results of our business monitoring survey where you could see the kind of demand assessment and the way the price expectations are declining. And actually this kind of price expectation businesses saw back in 2019, very dramatic upwards growth, and then as the VAT increase and other effects subsided, they saw the same dynamic.
So the weekly inflation, which is certainly not a full one, we always underscore it, it doesn't give us a full picture, but at least in as far as the weekly inflation data is concerned, this didn't give us any obvious reason to feel cautious. And I believe that the analysts were able to see the same, I mean the ones who analyze data. And we even saw that some adjusted their expectations. The financial markets also shifted their expectations and 15.5% was something that was put into the structure of interest rates. So I believe that our decisions didn't run apart, I mean with the market expectations.
Now as far as the signals are concerned, at this point in time we have more confidence in that we will be able to continue reducing the key rate over the next board meetings, and that is also coming from our baseline scenario key rate forecast. And so we bring our signal to be in conformity with this trajectory. But I would like to underline that our signal is not a firm commitment to reduce the key rate. It is not linked tightly to any board meeting. So as I'm saying, we're going to assess the validity of any further key rate reduction based on the data analysis. That's what exactly we mean.
And as far as the aggregate impact of VAT upon prices is concerned, even during the previous episode the basic transition occurred in January. It was less in December. But nevertheless, we do note that this year, I mean in December maybe even less than during the previous period, there was a transition. It was very carried forward, it carried through in December. We were saying that it's definitely going to be more than 7% because one has to take into account the difference of this particular episode of the VAT rise from the previous one. Firstly, a bigger list of products ended up being impacted by it, and secondly, a bigger number of companies because the range was brought down and so more companies ended up being in the payers list. At least VAT on acquiring and the banking operations, which in terms of the chain effect spreads out.
But more precise estimate on the VAT impact and whether there's going to be any secondary effect, I believe one will be able to assess only once having the results of the first quarter in hand. Definitely not earlier, maybe even later than that, because it is more difficult to know down to the last cent how much in the January price growth came from VAT rise. So nevertheless, the model estimate will definitely be telling us to what extent it might influence the price dynamics in January, the inflation expectations, and the speed of them coming down throughout this year. Yes, the inflation recreation peak has been passed. But for the monetary policy, it is going to be very important to understand to what extent it was significant and speedy, in what way, how speedy they're going to wane. And maybe those who've brought their prices up because of VAT, having noted that the consumers aren't really willing to embrace this price growth, they may even partially pull these price increases back. To be honest, to give you any full verdict with respect to the VAT impact, it would be possible to do that towards the end of the year.
In the last row, please. Izvestia newspaper.
Could you please tell us, if actual inflation is going to slow down faster than the forecast, but the inflation expectations are going to remain at an elevated two-digit level, what will be the most important factor for you to rely upon when making your key rate decision?
Well, you know, we certainly analyze inflation and the inflation expectations. These are the two things interlinked because if inflation is going to be sufficiently low, reach our target level, while inflation expectations remain high and people will be making their decisions based on the inflation expectations, then the risk of inflation not staying packed to 4% would be very strong. So inflation expectations, against all other things being equal, high inflation expectations would mean narrower space for us to move with the key rate reduction. But we are sure that if inflation is to be maintained at the target level for a longer period of time, inflation expectations invariably start going down.
Well, it might be taking place slower than during the previous period. I enumerated the factors because inflation remained very high quite continuously and there is a higher tariff indexation thing in place. But you know, they will be playing against each other and we will definitely take into account both of those.
Mr. Zabotkin, if you can add something, please. A very quick remark. What might happen if one ignores inflation expectations and basically just tracks the actual price growth? As a result of it, we will end up having not the inflation expectations going down and the inflation slow down. We will end up having the accelerating lending supply and demand, sorry, because we will have lower rates against the high expectations. And so exactly the opposite results will come, because what we're trying to achieve is price stability and well-balanced economic growth.
Dear colleagues, please. Elena.
Elena Fabritner, Reuters. I may slightly repeat Rita's question about what kind of options you had on the table today, whether you were considering making it by more than 50 basis points, and will it be possible something like that this year?
We reviewed two options: to keep the rate as it was and then bringing it down by half a percentage point. The discussion revolved around these options. Those who were in favor of keeping the key rate made a stronger emphasis upon the December and January data being quite vague, not clear enough, and so one had to first get more information about inflation's ability to go back to 4%. While others who were in favor of reducing the key rate relied upon quite a broad information set of information from surveys. I should say that the business monitoring data, which is more advancing and actually quite well correlates with the statistical data, so there were good reasons to really follow this.
Now in terms of possible steps, we're not commenting because it all depends upon the possible situation, the way it evolves. You know, we could make bigger steps, but we could also go into a pause mode as part of the possible scenario. So, it would all depend upon the data we receive. Mr. Zabotkin, I wouldn't even rule out 25 if there is any good reason for it.
All right. Thank you. Next question comes online from Andrei Torugov, People's Gazette from the city of Orenburg.
Good afternoon. Business to a large extent is currently worried about the mortgage rates and the availability of housing. It's no secret that the market mortgage rate is very much higher than the central bank's, you know, 21% for the secondary housing and real estate. Based on your forecast, when one should expect the mortgage rates to go down to the level that a family in the region can afford to buy themselves someplace to live at, at least, you know, 12 to 15%? Thank you.
The availability of mortgage is a very important factor, truly so. But we also are of the opinion that mortgage offering will be broadly viable once inflation demonstrates sustainable decline. What is not less important is for people to make sure that low inflation is a serious thing and for long. In the meantime, the mortgage market rates do remain high. Although one should say that they have gone down below 20% by the end of last year, but of course that is still a higher level. But you know, let's take a look when the market rates may go down and what these market rates are dependent upon. First of all, the cost of money that the bank raises from individuals and businesses, currently it's 13 to 15%. If you add on top of it the credit rates cost, interest rates, and banking fees, we end up having this 15 to 18% that the banks are offering in the mortgage market. So it turns out that a lot depends upon the deposit rates, I mean for the banks to bring in money. These in their turn directly depend upon inflation, inflation expectations. You should agree that when somebody opens a deposit, the deposit rate offer is going to protect you from inflation. But if someone expects inflation to be 14%, like approximately it is now, then the deposit rate should reflect these expectations. And therefore, the mortgage rates against the backdrop of high inflation expectations won't be able to demonstrate quick decline.
But again, based on our forecast, already next year inflation should become stable around 4%, close to 4%. Of course, one should allow some time for the inflation to stay at that low level so that people can have faith in it being for a continuous period of time, which will positively impact availability of mortgage. Remember 2017 to 2019 when mortgage was available not at 15, 12 to 15%. It was lower than that, 10% and lower. But due to the fact that since 2017 we kept inflation very at a very low level, even below 4%. But one shouldn't really juxtapose this fully from 2014-2017 because at that point in time we didn't have any large-scale subsidized mortgage programs. And I'm forced to continuously repeat: the more we have always subsidized lending in this economy, the higher should be the subsidized mortgage rate, because inflation is going to really spiral up. Because remember last year, how much was taken? 3,600 billion. So under such conditions, the mortgage rates will definitely turn out to be higher than what we remember seeing in 2017 to 2019, because in 2017 to 2019 it was just about 120 billion rubles if you talk about the scale of it.
Just for your understanding of the scale of the influence of the subsidized mortgage upon the middle mortgage rate across the country, the average rate is 7.5%. You see, so that is the average between 6% for the family mortgage program and the market level that we see. But on average for a Russian citizen, the cost of a mortgage loan is currently 7.5% in terms of its rate.
Thank you very much, dear colleagues. Yulia in the third row.
Good afternoon. Yulia Rostur, Market Power. Over the past few years, we've seen quite a few situations where the rights of minority investors have been infringed upon and the Bank of Russia always acted in their favor. Now the question is whether there is no need right now to create any special departments to protect the rights of minorities and possibly appoint some sort of a specialty ombudsman.
I think in terms of the special department, I don't know which structure do you mean it to be put in, the Central Bank of Russia or any separate entity. I don't think it will somehow change things around in protecting the minorities' rights because that is the question of legislation and the legal administration. Well, in terms of ombudsman, we do have ombudsmen who protect the businessmen's rights. So I don't know, Yulia, I do not see that this will change things around strongly. But as part of our authority, we're going to continue to protect the minorities' rights because we believe it to be principally important in order for the country to enjoy growing investments. Because if we want investments to come not only from the government budget or from the businesses' own profits but also to raise shareholder capital, which in many countries plays a significant role in investment activities, certainly the rights of the minority shareholders should be fully safeguarded and we shall continue working towards this.
Sergei Bolto, Rossiyskaya Gazeta. Just in follow-up of my previous colleague's question about the mortgage. Thank you very much for explaining the subsidized mortgage. I remember last year you heard that such questions quite often and you were saying that the gradual lowering of the rate is not going to expedite the demand. But nevertheless, we remember seeing the demand for mortgage towards the end of last year, not only in the primary market but also in the secondary market. People somehow were really running head over heels for the mortgage lending at 18 to 19%. So how can you explain consumer behavior like that? Are you reflecting these in your decisions about the key rate? And do you believe that as the key rate may be further brought down, we should expect the spiraling demand for both market-based mortgage and in the secondary housing?
We do not see any spiraling demand for the market mortgage. In the beginning of the year, there was some for the subsidized market because the housing prices really were accelerating because of the growing demand. But we do not link it directly to the lowering of the key rate because the reduction of the rate definitely brought about a certain higher level of activity in the area of the market mortgage. But the factor of the mortgage acceleration in the end of the year comes from the subsidized mortgage. And indeed, the housing prices, both for the primary ones, speaking about last year, grew by 8.7%, which is higher than inflation. And the demand was more active because people expected, you know, the tightening of the mortgage in July. And so such acceleration also took place in the past whenever one would start debating a tighter monetary policy and as a consequence of it for the market-based mortgage, so an acceleration for the housing mortgage and the national lending would kick off.
Now specifically talking about Moscow, there are special factors in the Moscow primary market. The share of proposed housing has increased with a higher level of finished renovation. Because when you buy, let's say, something which is just at the pit level when there's no foundation even, then it definitely is cheaper. Speaking about how prices may be affected by the subsidized market, you should compare prices in the primary and the secondary housing market. In the secondary one, where the subsidized mortgage effect is minimal, there was no notable price growth throughout 2025 and the annual price growth for the secondary housing was less than inflation, you know, 2.9%. In Moscow, even 1.5%. So we do see that the secondary market here is more adaptive, more flexible. And the situation in the housing market is certainly something that we certainly do take into account, although that not directly affects inflation, but they may affect the speed of the consumer price growth via different channels like lending to the developers, then profit growth, then investment demand on the part of the construction companies and various related expenditures on furniture and whatnot. So altogether, we definitely analyze it all.
There's high demand towards the end of the year. In the end of the year, it was related to various fears that the rules of the family mortgage could be changed by February 1st. And the second point, from the point of view of the monetary conditions, how they affect the housing demand and the housing prices, the secondary market is much more indicative than the primary one. Why? Because the average price in the primary market in almost every location, in every city, depends upon the readiness of the development projects as well as the set of projects that are currently being put in sale, are being offered. You see, so there is a never-ending structural movement, you see, in terms of the housing availability in the primary market, which introduces a lot of adjustment into price dynamics.
Thank you. Next question comes online from Yapis, Bloomberg, please.
Good afternoon. I've got a question about the possible confiscation of the Russian assets. The central bank already started its defensive action and submitted a claim against Euroclear in the Russian court. Is Russia ready in response to the Russian assets being confiscated to confiscate something belonging to the European Union, like the media stated, the Norwegian welfare fund and European bank fund? How many European assets Russia is controlling that it is ready to confiscate in response? Could you please tell us, is it more than 200 billion or less than 200 billion? Another little question. Does the central bank look into the possible scenario of re-establishing the economic cooperation with the United States and is it ready to start paying for or receiving payments for the Russian exports in US dollars?
As far as the response measures are concerned, if the decision is made to arrest the illegally confiscated gold and currency reserve, that is the decision that is being made at the level of the country's leadership. How much are we in control of? We're not disclosing this data. I've previously mentioned it more than once. Now with regard to a possible development of a relationship with the United States, we as the central bank were not, at least for now, involved in this decision-making process.
Egor in the second row, please.
Good afternoon. Thank you very much for your work. Egor Shimo, Egor Shimo Media Projects. I would like you to ask to be a little bit more specific. Currently, with very expensive funding, there are so many businesses which are on the brink. You see, some go into insolvency, some completely go down. In which way the board of directors of the Central Bank of Russia takes into account this possible pressure and possible business losses when making a decision to reduce the key rate or to keep it? And what kind of things are you monitoring? What is the mechanism that you are using?
Yes, indeed, businesses are facing high costs in servicing their debts. But the majority of businesses, I mean with the exception of extremely overburdened by a loan, the biggest pressure upon your cost comes not from, I mean if you measure up your development plans against your available resources, the costs run by these businesses in their prevalent majority, once again, comes from the operational costs like price growth for commodities, imports, materials, components, and these are all the consequences of the high inflation. With the help of, and with the help of the high key rate, we are trying to fight this high inflation.
Now to overpressure it, to stretch it too far, would mean that the demand will fall and it will be below the existing capacities to manufacture products. If that were to happen, then the inflation would very abruptly slow down. It will fall below the target not for a short period of time, because what happens with us is that during the summer season there is a seasonal decline, but it will stay for long. If we were to see such a risk, we will certainly be reducing our, we would soften down our monetary conditions. We will reduce the key rate quicker and we will be choosing this kind of a path. That is why it is very important for us not only to be cognizant, not only inflation, inflation expectations, we analyze economic activity, we monitor businesses. It is important for us to see almost everything in order to be able to forecast the way things are going to be evolving and to fine-tune our monetary policy. Currently, we don't see any prerequisites for that. And so the key...
Rate reduction, which is happening, and let me remind you that since the middle of last year we have brought the key rate down by 5.5 percentage points. Let it be smooth but significant nevertheless. And so our baseline scenario, amongst other things, also calls for the reduction of the key rate that will support businesses. Thank you. Dear colleagues, please. Nikita.
Good afternoon. Nikita Mitrofanov, I was the analyst who was expecting the central bank to go into a pause mode. I'm the author of the Economical Telecom channel. My question is about the unemployment. We're having it at a record level, but as far as inflation is concerned, this is a pro-inflationary effect because the maximum number of possible people who can be working are currently getting paid. And this means that they can spend their wage and create some sort of a demand. This is one side of it. The other side of it is that all the deposits currently, they couldn't have delayed demand, constitutes some huge deposit mass. So a situation may evolve into the one when we will be having a 4% targeted inflation. The key rate will go down but consumers will still have a lot of work to do. They will still be struggling with their demand. They will start spending money from their deposits or will they be applying for more loans because they all got guaranteed payroll and so there's going to be a risk of the second wave of another inflation. Now my question is, does the central bank take such a possibility into account and in which way it is thinking to avoid it in the future? Just a little more specific, I should be, because our, you know, inflation target is 4%.
Well, truly, we are currently seeing quite a big amount of savings. We're not interpreting it as delayed demand which, against the lower key rate, will avalanche itself into the market because we've gone through a considerable growth of real wage which helped people to save not at the sacrifice of their consumption. And the consumption last year actually grew by 3.4%. If you compare it with a period of low inflation, the inflation then was at a level of 2.3%. So consumption has been growing. Savings were being done not because consumption wasn't there. And so the inflow of funds into the deposit continues to happen, you know, even with the reduced rates because people can see that these rates ensure savings from losing their purchasing power. Now with the reducing rates gradually, the saving standard is going to follow suit and that is normal, that is supposed to happen, but that only means that the lesser part of the future income is going to be dedicated to saving. It doesn't mean that people will pull their money off the deposits in the accounts and will go on a spending spree. As I said, we are making very cautious, very balanced decisions so no dramatic changes in terms of savings propensity should be expected. And that similarly, you know, affects the attraction of, you know, consumer loans because we see that only the mortgage loans grew but the non-mortgage loans are not growing. Now the bottleneck is exactly what you're talking about. The ultimate low level of unemployment, which is good, but against such a low level of unemployment, the possibilities for economic growth are going to be defined by the labor productivity growth which becomes a key factor. That is why it is so important for the government to make the kind of measures to improve labor productivity. Thank you.
Dear colleagues over there.
Good afternoon, Mushina from RIA Novosti. Could you please tell us, does the Central Bank of Russia support the Russian parliament's proposal to make all of the real estate transactions conducted on a cashless basis? Do you see any impact from that upon the real estate market? And another question from a different area. How and when the key rate is going to be final and definitive?
Well, in terms of the last question, we have a forecast for the next year to be 8.9% as an average throughout the year. Now, with respect to the proposals coming from the Russian parliament, we haven't seen them in a specific way. We need to discuss it. Of course, the development of cashless payments is an important thing. Let me remind you that from 2015, we've seen a considerable change in the ratio between cashless and cash. Back in 2015, cashless payment accounted for 15%, the rest of it was cash. Currently cashless is 88%. And we've been able to achieve it without looking back or without any jitters and jolts simply because cashless payments were being made comfortable, convenient and easy. But we need to take a look at what specifically is being proposed. What am I afraid of? Let's say if any restrictions or prohibitions are going to be introduced to be placed upon any cash payment for these transactions as well as the money changing hands not to move into some shadowy area where the contracts are going to be, you know, officially shown in some low prices while the real money is going to be someplace else. Now with respect to the second question, we don't see any systemic effect because the situation principally was very much resolved.
The Bank of Russia has substantially reduced its oil price forecast for taxation purposes. So based on that is our question. What is the central bank's assessment of the income part of the National Welfare Fund exhausting this and what will it do if this risk happens?
Our scenario on price does not take into its possible thinking that the source of funding into the National Welfare Fund is going to peter out.
Yanukov from Expert magazine.
I wanted to ask you a question. Partially you have already answered but nevertheless as the key rate is being brought down, the banking deposit rates would also fall. Does the central bank see a risk in it? How long it would be profitable to keep one's money upon deposits and what would you recommend consumers to spend this money on after that?
