OREANDA-NEWS  In the event of a sharp rate cut in the Russian Federation, taxes will have to be raised or more money will have to be printed. Nikolai Kuznetsov, an associate professor at GUU, Doctor of Economics, called such consequences, as quoted by Bankiros.

According to the expert, at the next meeting, the regulator has several options for changing monetary policy. The first scenario is a balanced one, in which the indicator will remain at the current level in order to reduce it by two percent by the New Year. Alternatively, the Central Bank may soften the PREP by one percent and by another one or two at the last meeting in 2025 in December.

The second option is politically motivated. In this case, the Central Bank may make a politicized decision to radically reduce the key rate (below 10-12 percent by the end of the year). However, this option is fraught with a number of risks.

"In such conditions, the "hole" in the country's budget will grow catastrophically. And in the absence of external borrowing, this deficit can be covered only in two ways — by turning on the printing press or by withdrawing money from the population (through another increase in taxes, excise taxes, and the like). So this unsupported economic growth can cost us all dearly," Kuznetsov explained.

Analysts interviewed by Izvestia believe that the Central Bank will keep the rate at 17 percent on October 24 due to staff shortages, accelerating inflation, rising inflation expectations, and problems with gasoline, which affects the price situation in the country.