- Decision
- Maintain
- Rate change
- 0 bps
- key rate
- 21%
The Bank of Russia’s Board of Directors on 21 March 2025 kept the key rate unchanged at 21.00 percent, judging that although current and core inflation have eased—seasonally adjusted price growth slowed to an annualised 9.1 percent in January-February from 12.0 percent in 2024 Q4 and annual inflation was 10.2 percent as of 17 March—underlying pressures remain elevated as domestic demand continues to exceed supply. After also holding the rate at 21.00 percent in February, the central bank says the existing monetary tightness, marked by still-restrictive real rates and tight non-price lending terms, is sufficient to drive inflation down to 7.0–8.0 percent in 2025 and back to the 4 percent target in 2026. Lending growth is subdued—retail loan portfolios have contracted since December 2024 and corporate credit expansion is only moderate—while high deposit inflows signal households’ strong propensity to save. A firmer RUB since early 2025 has helped temper recent price gains, though the bank warns that a deterioration in external trade conditions remains an upside risk for inflation. The central bank expects inflationary pressures to moderate further as credit cools and fiscal normalisation proceeds, but it stands ready to raise rates if disinflation proves insufficient and stresses that tight monetary conditions will need to persist; the next policy decision is scheduled for 25 April 2025.
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.