- Decision
- Maintain
- Rate change
- 0 bps
- key rate
- 21%
The Bank of Russia left its key rate unchanged at 21.00 %, judging the prevailing tight monetary stance sufficient for now to curb still-elevated inflation driven by demand running ahead of supply and by 2024 ruble depreciation. It signalled that a further hike will be considered at the 21 March meeting, stressing that returning inflation to the 4 % target will require a longer period of restrictive policy than assumed in October. The central bank said market rates have eased modestly since December on lower policy-path expectations, yet overall monetary conditions remain tight and banks are imposing stricter non-price lending terms. Annual inflation was estimated at 10.0 % as of 10 February, with seasonally-adjusted quarterly price and core inflation running at 12.1 % (annualised); the forecast sees inflation at 7–8 % in 2025 before converging to 4 % in 2026. GDP grew 4.1 % in 2024 on strong domestic demand, but the labour market is still tight and wage growth exceeds productivity, though firms are now more cautious on hiring. Lending has cooled across retail, mortgage and corporate segments, and household saving has surged, prompting the Bank to trim its 2025–26 credit growth projections. The balance of risks remains skewed to higher inflation, notably from persistent demand pressure, elevated expectations and possible adverse trade-terms shifts, partly offset by potential fiscal tightening and faster-than-anticipated demand moderation.
Rate evolution
From June 2025 to July 2026, the Bank of Russia lowered the key rate by 600 basis points to 14.00%, with 300 basis points of easing delivered in June and July 2025, smaller cuts thereafter as disinflation became uneven, and successive 25 basis point reductions on 19 June and 24 July 2026. Early decisions cited falling underlying inflation, slowing domestic demand and the economy’s return to a balanced growth path, although monetary conditions remained tight, the labour market stayed tight and inflation expectations remained elevated. Through late 2025, cuts slowed as underlying price growth stayed above 4%, lending accelerated, and one-off moves in tariffs, fuel, fruit and vegetables, value added tax and administered prices clouded the signal, while the Bank’s risk framing hardened from slightly reduced but still prevailing proinflationary risks to increased proinflationary risks in October.
The June and July 2026 cuts reflected moderate economic growth after a temporary decline at the beginning of the year, slower current price growth in April and May, and average price growth of 5.0% in annualised terms in the second quarter, but the Bank noted that underlying inflation remained at 4–5%, inflation expectations had increased and wage growth continued to outpace productivity. On 24 July, it said a smoother key rate decrease was required because of the direct and second-round effects of temporary production capacity shutdowns in certain sectors and more expansionary fiscal policy over the three-year horizon than projected in April. On 11 September, the Bank held the key rate at 14.00% as current price pressures increased significantly, underlying price growth accelerated to 5–6% primarily because of a temporary reduction in production capacities in certain sectors, annual inflation reached 6.3% on 7 September and proinflationary risks increased, while it maintained that further decisions would depend on inflation, inflation expectations and risks from domestic and external conditions.