Today the Board of Directors of the Bank of Russia has again decreased the size of the key rate — now to 4.25%, updating, thus, a historic low. The Central Bank noted that the recovery of the economy after the easing of restrictive measures will be gradual, now the regulator expects that by the end of the year, the GDP will shrink by 4.5 to 5.5% and annual inflation will be in the range 3,7–4,2%.The Central Bank, as expected, continued to lower its key rate — today its Board of Directors took the decision to reduce the rate by another 25 basis points. Thus, the rate now is 4.25% per annum — a new historical minimum. In June, at the last meeting due to low economic activity and slowdown of inflation, the Central Bank lowered the rate by 100 points to 4.5%. Then the head of the Bank of Russia Elvira Nabiullina said that there are still opportunities for further reduction. This year, as in the first half of the year 2021, on the dynamics of inflation will affect the deep fall in domestic and external demand, recorded in the second quarter of 2020. In June, consumer prices were mixed, partly due to a gradual and uneven recovery until the supply of goods and the realization of pent-up demand from consumers. In June inflation rose to 3.2% yoy (after 3% in may) that the Central Bank is associated with “base effect in the first place in the dynamics of prices for fruit and vegetables”. According to July 20, the consumer price index amounted to about 3.3%.However, the “upward pressure on prices” in the short term can have, for example, violation of the supply chain in terms of conserving some restrictions and additional costs of companies related to the preventive protection of their employees. According to the forecast of the Central Bank, this year inflation will reach 3.7–4.2% in 2021-m — 3.5–4%, and further rate will remain close to 4%.As noted in Central Bank, the economic recovery is the phased removal of restrictions will be gradual. In the meantime, the business recovery remains moderate and uneven — for example, to continue the restoration of the services sector and retail trade and industrial production in June, by contrast, slowed down. “However, weak external demand, together with restrictions under the deal, OPEC+ is reflected in the decline in exports that makes a negative contribution to the dynamics of economic activity”,— stated in the message controller. The Central Bank believe that the path for further recovery of the economy can be unstable — because of falling incomes, cautious business sentiment, as well as restrictions imposed by external demand. In 2020, the Central Bank expects a decline in GDP by 4.5 to 5.5% (earlier it was mentioned 4-6%). Recovery growth, according to Bank of Russia estimates, is expected in 2021-�� (3,5–4,5%) and 2022 (2,5–3,5%).The next meeting of the Board of Directors on the key rate is scheduled for September 18.Eugene Kryuchkov