Owing to financial stability in the banking sector, the key rate decrease has quickly and successfully translated into the easing of monetary conditions and supported the economy, 1/3  BIS central bankers' speeches  despite higher credit risks. Unlike the previous crisis periods, this year we have managed to prevent a contraction in lending. In addition to the key rate cuts, lending is also promoted by the regulatory easing and other measures implemented by the Bank of Russia. The preferential programmes launched by the Government are another important contributor to the easing of monetary conditions. In particular, preferential lending accounts for nearly one-fourth of new loans granted in recent months to small and medium-sized enterprises and about one-half of new mortgage loans. Nonetheless, the anti-crisis support measures implemented by the Government and the Bank of Russia will be gradually terminated. We also take into account that it is essential to maintain accommodative monetary conditions next year in order to stabilise inflation close to 4% over the forecast horizon. When making our decisions on the key rate, we also estimate how saving behaviour is adjusting to lower interest rates in the financial market. We are aware that in this case financial institutions, companies and households need time to adjust to the new conditions. This is especially relevant since the pandemic, declining incomes and higher uncertainty may dramatically alter consumption and saving models. Seeking higher returns, individuals are increasing demand for various instruments in the financial market.

Elvira Nabiullina: Review of recent inflation developments in Russia and economic outlook Statement by Ms Elvira Nabiullina, Governor of the Bank of Russia, in the follow-up to the Board of Directors meeting, Moscow, 18 September 2020. * * * Today, the Bank of Russia has decided to maintain the key rate at 4.25% per annum. Why have we made this decision, although we do see room to further ease monetary policy under the baseline scenario? Firstly, in recent months inflation has been slightly higher than expected. This trend has been driven by both a rapid revival of consumer demand after the lockdown period and the weakening of the ruble in July — August. We estimate that short-term proinflationary risks have slightly risen again, while disinflationary risks somewhat decreased. However, disinflationary risks still prevail in the medium run. Secondly, the external environment has become more volatile. There are rising concerns about the pace and sustainability of the recovery in the global economy, especially considering that in recent weeks the pandemic situation has worsened to a certain extent in a number of countries. Geopolitical risks have intensified. Moreover, we also considered the following factors when making our decisions. Inflation expectations remain elevated, affected by price and exchange rate movements and the persistent uncertainty over further developments. The companies we survey are reporting rises in costs due to higher input prices. Moreover, they incur extra costs since they need to comply with the sanitary and epidemiological requirements. Concurrently, businesses assess demand for their products as weak.