Statement by Elvira Nabiullina, Bank of Russia Governor, in follow-up to Board of Directors meeting

Colleagues, good afternoon. I'm very glad to see you at our press conference by the chairman of Bank of Russia, leader Navan and the deputy chairman, Alexi Zabotkin. And to begin with, we'll hear the statement following the board of the director's meeting. Good afternoon. Today we have made the decision to cut the key rate to 14 and a half percent.

Economic activity is slowing down. Demand dynamics roughly correspond already to the economy's capacity to ramp up supply. However, inflation still exceeds the target so far. Measures of underlying price growth remain in the range of four to 5%. Moreover, pro-inflationary risks have risen considerably. They are attributable to the Middle East conflict and possible changes in fiscal policy. In these conditions, we need to follow a more cautious and prudent approach to making our decisions. Taking this into account, we have slightly raised the forecast of the average key rate to 14 to 14% for this year and 8 to 10% for the next year. I will now explain the reasons behind our today's decision. Firstly, inflation. In March, current price growth did not decelerate, staying at about 6%, which was associated with one-off factors. Specifically, the Middle East conflict led to the redirection of tourist flows, which induced a rise in service prices. Another factor was growth in retail prices for petrol. Although transitory factors significantly contribute to price dynamics, we scrutinize fundamental reasons in the first place when analyzing inflation. The key aspect is the balance between the economy's production capacities and demand dynamics. Although the gap between the said indicators has almost closed, underlying inflation still exceeds 4% as a result of the demand overheating that was observed over previous periods. It continues to translate into inflation expectations which remain elevated. Additionally, increased budget expenditures in early 2026 also exerted outward pressure. Nevertheless, we forecast that the accumulated tightness of monetary policy will return underlying inflation to 4% as early as H226. We have kept the inflation forecast for this year unchanged at 4 1/2 to 5 1/2%.

Secondly, the economy economic activity decelerated in Q126, which was partly explained by the economy's adaptation to the tax changes. Another contributor was calendar effects. The first two months of the year had three fewer business days than January February 25, which accounted for up to a half a percentage point decrease in year-on-year GDP growth rates in Q126. According to our estimates, in Q2 2026, this factor will have the opposite effect. May June will have three more business days than a year earlier. All this means that we will only be able to assess output dynamics more accurately based on statistics for the first six months of 2026 as a whole. Investment activity has generally declined while remaining highly heterogeneous across industries and regions. Thus, mining and quaring enterprises had moderate investment plans in early 2026 due to last year's weak financial results. Companies may revise their investment plans upwards this year due to higher prices in global markets. Construction is also expected to rebound to a certain extent. The abnormal frost and snowfalls at the beginning of this year led to the forced downtime in Q126 and therefore construction companies will make efforts to catch up in the next quarter. According to our forecast, total investment in 2026 will be comparable with last year's amount. Consumer demand growth also slowed at the beginning of the year. March saw signs of its revival with car sales expanding notably. However, the rise in consumption is generally more moderate than in the previous year. The labor market is recording more obvious changes. Businesses have started to reduce their recruitment and payroll increase plans more actively. The percentage of businesses reporting acute staff shortages has been declining. Some companies have begun to lay off employees. That said, the unemployment rate stays at its record lows. This means that in the vast majority of cases, people manage to find new jobs, especially in large cities where companies still demonstrate rather high demand for labor. Overall, the labor market tightness has been decreasing gradually and its pressure on businesses course will be weakening.

The economy's moderate dynamics in Q126 will be offset in the next periods according to our estimates. In addition to calendar effects, this will be driven by a partial rebound in consumer and investment activity which is already obvious from high frequency data for March and April. Higher prices in global commodity markets should become an additional factor that will support domestic demand. Considering this, we have kept our GDP growth forecast for this year unchanged at the range of .5 to 1.5%.

Thirdly, monetary conditions, they have slightly eased overall since March while remaining restrictive. Interest rates on main financial market instruments have continued to go down, adjusting to the key rate reduction. Credit activity remains moderate from the beginning of the year. Consumer lending demonstrates signs of a rebound. While growth in the corporate segment is still modest in Q126, part of company's financing needs were met not by loans but by record high advanced payments from the federal budget. As a result, the growth rate of money supply, which combines the effects of the fiscal and credit channels, is running closer to the upper bound of the 201619 range when inflation was sustainably low. If the fiscal policy's contribution to money supply remains more significant, the dynamics of bank lending should be more moderate for the growth rate of money supply in the economy to stay at the current level. Interest rates on time deposits have also been declining following the key rate. In these conditions, households have started using other financial instruments and demand deposits accounts more actively. Household saving activity remains high overall. Now I would like to speak of external conditions. The situation in the Middle East remains a factor of uncertainty. According to our baseline scenario, the conflict will entail a slowdown in the world economy, a global rise in logistics and energy costs, faster inflation in higher interest rates worldwide. We have revised upwards the forecast of the Russian oil prices to $65 per barrel for this year as well as the forecast value of exports. The value of imports will also increase due to higher global prices, albeit less notably than exports. The surplus of foreign trade will significantly exceed the level that we expected in February. However, the influence of these additional export earnings on the ruble exchange rate will largely offset by the fiscal rule mechanism. Thus, the resumption of fiscal rule-based operations will have a stabilizing effect on the foreign exchange market. I will now speak of risks. As for the budget, its expenditures in Q126 considerably exceeded both their seasonal norm and the elevated values of 2025. In previous periods when the dynamics of expenditures at the beginning of the year were elevated, they were usually followed by larger expenditures and a more notable budget deficit for the year as a whole. We're now expecting the updated budget parimeters for this year. The general logic remains the same for us. The larger is the fiscal stimulus, the lower should be the growth rate of the second component of money supply, that is lending. This means that all else being equal, the key rate should be higher. An important risk related to external conditions is the situation in the Middle East. If the conflict drags on, the adverse effects for the Russian economy will be strengthening. The implications caused by global rise in costs might turn out to be more serious than the benefits from larger exports and a stronger ruble. Disinflationary risk is a more considerable cooling in domestic demand than assumed in our baseline scenario. Winding up, I would like to comment on our future decisions. We have currently reached the point where demand overheating has almost dissipated while inflation has not yet returned to its low rates due to the time lags of monetary policy transmission as well as heightened inflation expectations. According to our forecast, the accumulated tightness of monetary conditions will help bring underlying inflation down to 4% in its sustainable part in H226. Nevertheless, our further key rate decisions will largely depend on how the situation will be unfolding and to what extent the risks I mentioned will materialize. Thank you for your attention.

Colleagues, please your questions and don't forget to introduce yourselves and identify your agency. Rita, please.

Thank you very much for the question. We reviewed two options, keeping the rate and lowering it by half a percentage point. I will tell you right here and now those who were in favor of keeping it as it was noted that in the sustainable part, inflation hasn't been going down since the middle of last year, staying at the level of four to 5%. And so one needs more convincing evidence to show that the sustainable process of the inflation going down as well as noted the higher proinflationary risks with regard to narrowing the forecast range of the key rate this year. First of all, it is related to the fact that part of the year has already gone and in terms of inflation, we're currently moving at the upper part of our forecast range. That is why we lifted the lower part of the range by a half percentage point. Pauses are always possible and our signal about appropriateness of such a decision contains such breaks such pauses it will all depend upon the data even when the signal points towards more moderate decisions the pause is possible.

Colleagues, please. Rita in the second row.

Yes, against the current oil prices exactly the national wealth fund could be further topped up. But as far as the fiscal rule is concerned, we saw that the ministry of finance previously made an announcement that is not going to reconsider any social cut off and will go back to the fiscal rule and at the same time will take into account the previously deferred operations. So in terms of the annual indicators this is neutral because that may generate an effect only within the yearly dynamics. Yeah. Well the fiscal rule never was put or put on stop because there was a pause in transactions in the exchange market related to the fiscal rule. Colleagues please. Maria.

The short answer is it will. Now the question is what kind of the key rate trajectory will be required for that. We will further specify it as the situation in the economy unfolds and how convincing the inflation slow down is as well as the inflation expectations going down. Something that you also refer to. Of course, we would feel much more comfortable to pursue our monetary policy if the inflation expectations were to be anchored at a much lower level. But we are aware that it's a higher level. I mean it's straightforward right now in terms of the uncertainties and the risks that we see around and particularly the longevity of the high inflation period. So the high inflation expectations amongst other things is also one of the reasons as to why we slightly have raised our key rate forecast for next year and we will definitely will be gauging our decisions to the inflation expectations dynamics.

Gasimonova is coming next from Kamchatka media from the Petropol of Kamchatka city.

Well indeed it seems that if the demand for staple goods is not really dependent upon the prices which is the case the price for such products like bread will continue growing endlessly. But that doesn't happen. Let's consider why what exactly our key rate can do. Certainly, it cannot combat the price growth per individual services and goods. But most importantly, it may curb the general price growth and our task is exactly not to allow for an uncontrolled price growth over the board for bread, for medicine, for milk. Uncontrollable price growth and very accelerated price growth happens if there's more and more money in the economy but in terms of goods and services they are not catching up and that is why just imagine if we were not to raise a key rate when prices start spiraling what happens in such a period manufacturers begin hiking prices because they see strong demand in response People are demanding wage growth and it becomes a vicious circle. Prices are growing, wages are growing, business again raises prices and in fact inflation eats at households incomes and any growth in wages and the first ones to suffer here are the pensioners and lower income categories which cannot participate in such a race. And so increasing the key rate we effectively create the possibility to sever this vicious circle whenever in the economy the amount of money is not growing uncontrollably. The people and companies are more prudent in spending and manufacturers are not having this temptation to raise prices endlessly. Even for the staple goods prices don't go so fast but the competition is so important here. If the bread becomes more expensive in order for there to be a different producer who can sacrifice part of its margin in order to broaden an offering in the market and so competition is a crucially important element to contain price growth and this is super important for such product as staple goods. Oh maybe I would also like to add that staple goods they are in the area of special attention by the government and the government is undertaking measures amongst other things to restrict price growth for such goods like for example subsidies to the bakery industry from to millers export tariffs for example right now to stabilize grain prices the so-called rice dampening pricing is being used because whenever the price is high, the grain exporters are paying higher duty in these money is offered as subsidies to the grain producers. This is also another important factor to restrict prices for staple goods. But the key rate is effective as well. Not momentarily but it protects the households and their income so that people have enough money and everybody has enough money for everything they need for their everyday lives.

Julia in the third row please.

Thank you. Well, as we have already mentioned, we are observing the whole conundrum of the macroeconomic indicators. But in order to first of all, we are currently reducing the rate. But in order to either reduce more abruptly, I mean the key rate or in order to pursue a softer stimulating monetary policy, we need inflation to fall below the target. For the indicators to show considerable unemployment growth but neither this nor that is what we are seeing currently and not only in our forecast but also the businesses and the analysts point to that. Please Mr. Zabotkin.

Your colleagues please Nasha in the second row.

Well, I mean, you definitely should know that there is a debate going on right now about the possible changes of the budget parameters and in order to come to a final conclusion, we need the budget parameters to be officially announced. That is what we're looking forward the government for the government to do. But the logic is the same. The high is the budget spending or more importantly I mean if there will be structural primary structural budget deficit that would require much tighter monetary policy which would mean no what does the primary structural budget deficit means it means that through the budget channels more money will flow into the economy which means that the space for the private lending will be narrowed this is something that we will take into account but in the meantime while the parameters are not being announced in this debate. We understand that this risk remains. It exists. It has strengthened and I would like I would wish to say we're less confident in the disinflationary contribution on the side of the budget as was had been originally expected in the budgetary bill. Now as far as the narrowing of the range of the key rate is concerned as I said inflation based on our estimates and based on our analysis is flowing along the upper threshold of the forecast range and yes against all other things be equal that would mean less room for the key rate to be brought down.

Dear colleagues, please. Marina in the second row.

You're quite right. Humanity needed 50 years in order to go back to the moon. We will also go back to the 4% inflation. I'm quite sure of that and I'm sure that it will happen much faster.

Thank you dear colleagues. Anastasia please in the third row.

Thank you for your question. Well the statement about the overcooling is something that we do not agree with as Mr. Zabotkin before mentioned because you know talk about overcooling you have to have the evidence to really prove it. First of all that is in the considerable unemployment growth and that the inflation is falling much below the targets and that the household incomes are falling. Neither the first nor the third or the second for that matter are there but indeed in the Q1 the economic activity rate has slowed down and the rate growth in January and February speaking about January February turned out to be slightly lower than our expectations to a considerable part. This is explained by the time factors that the president noted Canada's three less three business days and the weather conditions which nobody could forecast in the end of the year which considerably impacted individual such important sectors as construction and development. The consumption also slowed down after the spike it demonstrated in the end of last year and the businesses needed some time in order to adjust themselves to the new tax changes which is a bit difficult to really foresee in terms of how this adjustment may turn out. But based on the frequency data in March and April, not just only frequency data in the meantime, we see that the economy is rebounding is returning to its growth path. And that is being demonstrated not only by the quantitative frequency data. We also see it through different surveys which we did for example one in April and the current assessment of the business environment has been improving and the business expectations for the next three months have also improved. Now in tri yeah fluctuations may take place but whatever happened in the first quarter I mean these changes of the rates I mean them turning out to be lower compared to what we've expected that didn't lead us to changing our forecast for the current year. We kept our forecast in terms of the economic growth bearing in mind the redistribution of the working days between the first and the second quarter. A more precise picture is what we're going to see closer to the end of H1 to our mind individual months and even the first and the second quarter separately should not be interpreted because that may lead to an incorrect conclusions with regard to the transforming. One other thing that I would like to remind you because people often oversee it because the kind of dynamics that really forms up during the first quarter, it reflects the consequences or rather the level of the tightness of the monetary policy of a year ago because we went through the peak of the tightness of the monetary policy. So right now we see this effect from the reduction of the rate and this particular effect is not going to be an instant something.

Dear colleagues please. Oh yes I see we have a question coming online from Pisman from Bloomberg please.

Well thank you thank you for your question. Yes, indeed. We're trying to use AI whenever we see a good outcome from a in the first place as an assistant when doing certain routine things when analyzing information and data. That when we discuss the monetary policy or making our decisions we don't use it one in an analysis work when we do the primary data analysis we use AI but in the meantime in terms of higher level decisions AI cannot displace professionals.

Please next one Reuters.

To answer our first part of the question is except that the data is too noisy you know to be able to make an assessment particularly as you know with regard to the GDP and the quality distribution thereof are always being specified and with quite a lag. Alexei please.

Colleagues, Anastasia.

Thank you. As I already mentioned, we don't see overcooling risk. There are overcooling indicators that we see unemployment, inflation below the target, household income decline. Neither of these we see but we believe that we're already close to a state when the demand over cooling has been exhausted. You see, that's very important. It is also important for it not to restart itself again. So, we need to pursue a very cautious monetary policy. But we of the opinion of the opinion that we're currently at the point where the production opportunities and the expansion of the goods and services production are in line with the demand growth rates that we see. Mrs. would you like to say something? No. Thank you. Dear colleagues please.

Well, I mean, but the labor market is still bears a lot of significance. You know, the wage growth, not only the wage growth or unemployment, but what's the dynamics both in the wage growth and productivity growth? If the wage growth is seriously ahead of the labor productivity, I mean, how much for example a worker may produce products and services, it all translates itself into the price growth and we may end up having the inflation spiral like I've mentioned before. And so the wage growth and the inflation growth will ensue from that. We currently are seeing that the tension in the labor market is diminishing. And this is not as much as the unemployment indicator rather than the adaptation of the labor market happening via different factors not only via unemployment and actually we are also closely monitoring situation with the partial employment. Yes indeed there is a bit of a growth there but in aggregation it's about 300,000 people and this is just not the kind of an indicator that would add to the effect you are right about unemployment but I should tell you that investments have grown strongly over the several previous years even despite the fact that last year investments somewhat went down comparing it to 2021 the level of investments is currently is by quarter larger. So there is a considerable investment growth which we are hopeful eventually will translate itself into labor productivity and into this overall growth. So situations may differ in different sectors but I shall repeat it again that such an overflow of labor into more effective application with a greater output. I mean the labor productivity is very important for structural change and generally I mean the key rate in the monetary policy principle is not intended to solve structural problems. However what you are referring to is important for us to make our decisions with regard to the monetary policy. So definitely we are closely monitoring and analyzing labor market.

We view there was another wave in the April round. You can see that since the middle of 2024, the availability of labor to businesses is improving, but it remains less. Still, there are more businesses which are saying slightly more than a half. It is less than it used to be back in 2021. We haven't yet gone back to that equilibrium in the labor market which we had until 2022, and that keeps up the situation within which competition for labor increases the labor costs, and that remains the factor which supports inflation still above the target level.

Yeah, this is a sustainable trend. Yes, the most acute situation we had in the middle of 2024. Again, I would like to refer you to our data and reports because in our coverage of that period, we have it on the 17th page.

Yeah. Dear colleagues, we received the next question online by Alex Araov from the Carter Bank information agency. Why are deposit rates falling faster than the key rate from its peak levels? The key went down by 6 percentage points, while deposit rates, considering the central bank information about the average rate, are already down 9 percentage points.

Well, the first thing that I would like to draw attention to is simply to remind you that the deposit rates in their normality are always lower than the key rate, and the current situation is quite appropriate. If you recall the situation when we used to have the key rate like we're having now, the deposit rate also used to be lower. Now, the reason as to why the deposit rates went down faster than the key rate can be explained by the fact that in the end of 2024, we happened to be in an extraordinary situation when the deposit rates were higher than the key rate. The norm is when they are below, but we had them higher, and it happened because then the banks were trying to restore their short-term liquidity standard. They were fighting for bigger deposit inflows by offering high rates, and it was quite logical. Once the liquidity became okay, then the deposit rates became normal and were going down faster than the key rate. Then, what I would like to draw attention to, which is also important based upon the cycle that we're going through, when the rates are going down, there is an expectation that the monetary policy is going to be eased, and then usually the deposit rates are going down faster than the lending rates because this is also something that is happening right now. Why? Because we know that depositors practically always have the possibility to withdraw their deposits and place them in another deposit under more favorable terms, and the borrowers can refinance themselves. So both of these mean the interest risk, and in order to really safeguard themselves, the banks usually, whenever the key rate is being brought down, they are reducing the deposit rates faster. And so the current cycle is no exception right now. Thank you, dear colleagues.

Yes, to a certain extent, we've been confronted by a new situation in the market because until now there was never an offer default in terms of such securities buyout because allegedly either the Ministry of Finance or the regional authorities placed such bonds. With the development of digital platforms, corporates also became issuers thereof. Quite often such paper makes it possible for the owners to call these bonds to maturity, and so it looks almost like a current deposit. So you can redeem your bonds without waiting for the final maturity. But it could be a difficulty if the investors are showing a run on them. And so the banks for such cases have an interbank market, also refinancing by the central bank, while the corporate issues don't have it. And so in the foreign experience we've looked through, for such high liquidity instruments, there are certain credential mechanisms in place which stop this liquidity run; they curb the investor appetite towards such products. So we're currently thinking about further finetuning of such people's or public bonds market from this point of view.

There is also a question about the non-qualified investor access to such securities because the public bonds is something that we are not limiting, not restricting, but what we're restricting is the sale of papers with a structured yield and wholly rated. Because originally, through the broker houses, they could have been offered only to the qualified investors, but such restrictions are not imposed upon financial platforms. Only brokerages have been restricted by it. In May last year, in the very beginning, we recommended such platforms not to sell such securities to non-qualified investors. In October last year, this restriction was introduced as a legally enacted restriction. For example, if the bonds don't have a high rating, they have to be tested because even if this is non-structured income, the investors must understand that there is a risk of a default there. So investors must be aware of what kind of a security they are investing into. Thank you. Eager in the second row, please.

Yes, thank you very much for your question. Balanced growth to us, whenever we talk about the economic balance growth of the economy, is when the aggregate demand growth that we are able to impact is in line with the possibilities to enhance the output of goods and services. If it is automatically high, that would mean a higher inflationary pressure. Therefore, that is rather about the correlation between the demand dynamics and the supply and the goods and services supply dynamics. Now, what we need to also consider is the growth structure. We don't expect a systemic shift of the growth structure towards consumption through the reduction of the share of investments. If you take a look at our forecast within the three-year time frame, the investment growth is higher than the economic growth, is higher than the consumption growth, and that calls for a further growth of investments within GDP. We are certainly talking about the average values when the economy we refer to the industry. If there are industries where investments are going to grow faster, and there are also industries where investments are going to slow down, shrink, but if we talk about the economy in general, then we anticipate specifically that the GDP share is going to become bigger. When I spoke about the balance, when I spoke about the balanced growth and that the aggregate demand would be in line with the production capacities, you shouldn't confuse that with investments because the production possibilities is the result of the investments which had been committed yesterday. So operational capacity today is your yesterday's investments, and so effectively the production opportunities is what the economists describe as the fixed assets accumulated in the economy. Well, this amount of investments strongly grew through 23-24. If even if investments remain at the current level, I mean the amount of investments, that would be sufficient in order for production capacities to grow faster compared to the past period. So you also need to take it into account when assessing the dynamics. Thank you.

Colleagues, please. Are there any more questions? Misha, please.

Let me begin with your second question. We got quite a number of banks, or rather not the number, or rather quite a big share of banks with a government ownership. It's somewhere stable around 70%. It hasn't grown. Now in terms of the quantity of the banks with the government participation, it has gone down. You know we used to have 40, now there are 37 of them, but that usually is because of the consolidation inside the banking sector. Now the situation that you are referring to, we are seeing them very infrequent because the government as the owner of such banks, I mean it makes up its mind, and the government is going to decide how to dispose thereof at its own discretion. The only thing that I can mention, in case such banks are to be sold to the new proprietors, these new proprietors will have to correspond to the requirements set forth in the legislation in as far as the financial stability and the business reputation are concerned, and the central bank is going to track it. Now with regard to the demand for cash, well yes, the demand for cash in the beginning of the year was higher than last year. We saw it, well in the first half of last year it was below the usual norm, but in terms of there being any conclusions made about structural shift, it's premature. I mean we will definitely be monitoring it, but the overall share of cash inside the money supply remains at a minimum. Mr. Zapkin.

All right. Thank you. Thank you. The next question comes online from Seda Marova Chetchna today from the city of Grozny. Seda, you're welcome.

Well yes, first of all, I would like to express my condolences to all those who suffered from the flooding both in the Republic of Chechnya and Dagestan. I understand that without any delays, help must be offered because always in such cases we send a signal to the banks that they should support those who suffered from it and offer additional postponement of loan repayment. And I must admit that the banks have always acted well on such advice, understanding their social responsibility. Since 2023, this has already been written into the law. The entitlement that people are given to have a loan grace period in case such a calamity happens, which also states that the local authorities, local government must expediently give respective documentary confirmation to those who lost their homes, lost their property, after which borrowers can go to the lenders within the 60-day period in order to settle the matter. We are very closely following the way the insurance companies and the banks are helping such people, and whenever we receive a signal or any grievance, we are ready to really get engaged because in the meantime we do see that the banks are really doing a good job and also offering their own restructuring programs which sometimes are more flexible than the grace period is offered under the law because truly the financial institutions, as far as this is concerned, have a lot of expertise, and we do see that the financial organizations are responding to such situations very quickly. Most important is the second part of it, I mean the one dependent upon the local authorities and the local financial institutions to also follow suit. Anna in the third row, please.

No, we don't see such a risk of unemployment growing, but unemployment parameters and the labor market situation, as I mentioned, is a very important indicator that alongside with other economic indicators we are analyzing very scrutinously and always discuss when we make our key rate decisions. So if there is data available which will point to a very strong emergence of unemployed, because we're currently seeing structural changes and shifts because their hands are moving from one sector into another. So if the economy is overflooded by it or inundated somehow, that would mean later on quite a possible significant reduction of consumer demand and inflation falling much below the target. If we forecast, if we expect this to happen, not wait until it comes, because the scenario basically points to it as a possibility, and the inflation expectations would fall below our target, that would definitely be the reason in order to reduce the key rate much stronger than the current baseline scenario calls for. But in the meantime, we don't see it. Yes, Mr. Zabotkin, please.

Yeah, it does. Thank you. Colleagues in the last row. Natasha, please.

Well, I would like to underscore that the macroeconomic interests of the nation in the first place is making sure that the well-being of its citizens grows, and it is being defined amongst other things that the savings and the incomes of the people are protected from inflation. That is the most important component here in the well-being of it. I don't see any contradiction here, but I would like you to be more specific, or rather sound more specific. Low unemployment is not the reason that is a testimony of the economic overheating. The reason was the demand overheating which was growing faster than the capacity to produce goods and services was growing, and that led to a stronger competition amongst the employers for labor and the wages growing faster than the labor productivity. Now if the wages are growing faster than the labor productivity, the growing spending like other types of expenditures is what the manufacturers translate into prices. And so this faster inflation eats up any top up of wage. It's really good when wages are growing in line with the productivity growth, and I'm sure that everybody understands that. So if that is the case, then inflation is not going to spiral. The well-being will be better. Yes, when getting out of this overheating, the unemployment may go back to its average longer period, because some economists even consider 5 to 10 years. But any averages they are much closer to the current lower rates of growth than the kind of values that you refer to, to the current low levels of unemployment. Much closer these indicators if you take a closer look at them. Thank you.

Next question comes from Arena Singua from Cheetah Zap news publication. Edina, welcome.

Well, thank you. Well, to begin with, let me say whether the monetary policy can fight the so-called non-monetary inflation, because we've always been saying that the key rate impacts demand only. You are absolutely correct that prices are being affected not only by demand but also there are costs sitting in prices. But the fact of the matter is that these costs, if they grow, businesses can translate them into prices only if demand is growing to the extent that enables within this growing demand to translate this, because when the demand is moderate, people are not in a hurry to spend a lot and businesses are not in a position to translate prices fully into prices. So companies have to sacrifice part of their profit or not in order to avoid losing their turnover. So tight monetary policy in this sense is effective. We do see back in 2025 inflation went down practically in all of Russia's regions. Now the question is whether the single key rate suits all the regions, the so-called the central regions, the remote regions. Well, because situation differs of course, but against all the regional differences, our task, our objective is to provide for the price stability across the country and the economy is a single body and so we pursue a monetary policy for the sake of the whole country. Just imagine if we start running differentiated policy in different regions. What would it mean? For example, for more remote regions, a lower key rate is going to be offered hypothetically and for other regions going to be higher. You would hardly enjoy it if the Moscowites will enjoy a higher interest rate on their deposit compared to your regions or vice versa. Businesses in the central regions are not going to enjoy having to pay more interest for the loans they can take. They would start going for the loans in other regions and so it would mean still the need to raise the single key rate in the single economic space. Such situation is hardly plausible, but you're quite right that all the regions are different. We do see that inflation nowhere can be the same. It is still different in between different regions. Amongst other explanations to it is that the supply chain costs are different. But the inflation dispersion is very much dependent upon the average level inflation. The lower is inflation, the narrower is the range of difference despite the fact that some of the supply chain costs can be higher. We saw it through the example of the period when we enjoyed a stable low inflation. So the differences between different regions was not very tangible. Thank you.

And dear colleagues, Edina in the last row, I see your hand. Please go ahead.

While the Hong Kong shares indeed remain blocked, the trading of those securities was put on hold after the St. Petersburg exchange was added to the sanctional list and the foreign depositories which were part of the whole chain of the transactions had to also stop their transactions. So currently the Moscow exchange is continuing to unblock it and runs the necessary series of measures to go through the compliance. So this whole thing is being worked on. Next one, Nikita, please.

Well, thank you very much for your question. Well, indeed this could be a discovery because so far I haven't been familiar with any advanced indicators, the only one which the precision ratio would be so good to predict the economic situation in the country. So we prefer to base ourselves, our analysis, upon a comprehensive set of factors, different indicators, statistical surveying and advanced ones. But I would like to tell you that we also pay a lot of attention to advanced indicators, amongst other things the survey indicators, because we trace the way the businesses and the economy adjust themselves to the tax changes and as well as the monetary policy impacts. But you asked about an example when it is when the advanced indicators could change our vision of the key rate trajectory. Somehow I cannot recall such a decision. Mr. Zabotkin, maybe you may remember one.

Yes. Please continue sharing us more of your discoveries. Are there any more questions left? Yes, Natalia. Go ahead.

Well, I think you should agree with me that having a mistrust towards everything new is quite natural because I do remember when we used to have payment cards coming for the first time, there was such a lack of trust towards the fast payment system. Currently it's only natural, although people also remaining who prefer cash. Cash is not going anywhere. It is going to remain and also the digital ruble is going to very gradually enter into our everyday life. There will be individuals who will never agree to use this, which is going to be quite normal. In no way we are planning to make it a forceful something. We wanted to make it a matter of comfort. There are so many myths around the digital ruble. I absolutely agree with you, like for example that it is necessary in order to control what people are paying for. But believe me, I never cease to say in terms of the transparency of payments and the banking secrecy protection, the digital ruble is no different from non-cash rubles. Everything is the same. The only difference, there may be something that we're debating quite actively, is that there come more possibilities to control the purpose-specific fiscal funds spending more accurately. There is some control over it already. There is control in place over how the budgetary funds are being spent. But the digital ruble enables one to automate it, to forget about the manual audits thereof. There would be smart contracts. For example, if the fiscal system allocates funds to build a school, clearly it would be quite easily possible to trace that this money has been spent only on that school. So this is control over the budgetary means where the digital ruble offers greater opportunities, greater possibilities through a smart contract application. But we do understand that the level of awareness is necessary. But you know, explaining things continuously is not enough with regard to any new instruments. It is important for people to try themselves what digital ruble is all about or to hear from their circle of friends who they trust that digital ruble is being used. Nobody's going to force anybody to open up accounts in digital rubles or to pay in digital rubles or control transfers. It is necessary for people to really come to this understanding themselves, and only in the autumn of this year it would be made possible, but throughout this period we will try and talk more and more about it. What is it that the digital ruble creates in terms of the consumer comfort? We've got time for a couple more questions. Vadim, please.

Well, in the meantime, the budget policy remains in the uncertainty area because we act on the announced budget parameters. The budget discussion is still going on, like I said, but there is also an expected improvement of the oil price situation. What I would like to draw attention to, whenever there is a fiscal rule being effective in the economy, then any change in the pricing situation in the global market, its impact upon economy is limited because the fiscal rule neutralizes the effect of any significant oil price fluctuations and its impact upon the domestic prices and inflation. What is really important is the final budget parameters, what they will look like, and the structural budget deficit, not the general budget deficit that many are paying attention to. And also it is important to make a decision with regard to this not only upon the current key rate but also for the next year because our monetary policy works with a bit of a lag. So we're here expecting the government to come up with more specific information. Mr. Zabotkin, it is important for us to have inflation at a lower mark already this year as well as next year within different scenarios, and so the decisions are being made in such a way so that the inflation would be brought down and will come down within any scenario. Well dear colleagues, our last question I guess. Sergey, please.

Well, first of all, I would like to say that the market is quite aware of the rationale behind our decisions and what we stem it from. You see, with respect to the margin of our reduction, the consensus was quite broad and unified. Maybe some are less cautious in understanding the true inflation dynamics, and maybe their interpretation of the inflation weekly data was more literal, which is relatively low. And we stated that not the weekly data is important for us. Monthly inflation data is more important to us so that we could see its dynamics. But possibly they paid great attention to the economic activity, I mean the market players and the analysts in January-February. I mean it's January-February, it is as I said, with regard to inflation, monthly data is more important to us and its dynamics rather than the weekly data, we've always been saying it. Similarly with regard to the economic activity assessment, quarterly data is more important to us and the correlation quarterly one because it can be quite a high volatility within a quarter and within a year. So, we're doing our best to make our conclusions, analyzing the forming midterm trends, definitely paying attention to the frequency information that is coming our way, but you know, attributing more weight, if you will, to the forming trends. I guess that's the way one can explain it.

Thank you very much, dear colleagues, for a