- Decision
- Maintain
- Rate change
- 0 bps
- key rate
- 21%
The Central Bank of the Russian Federation kept its key rate at 21.00 % on 25 April, judging that although headline and core inflation have eased—seasonally adjusted price growth slowed to an annualised 8.3 % in Q1 from 12.9 % in Q4 and annual inflation stood at 10.3 % on 21 April—price pressures and demand still run high relative to supply even as high-frequency data indicate a gradual return to balanced growth. Having held the rate at 21.00 % since February, the central bank will keep monetary conditions “tight for a long period”, projecting an average key rate of 19.5–21.5 % in 2025 and 13.0–14.0 % in 2026 to steer inflation to 7–8 % next year and back to the 4 % target in 2026. Lending remains subdued amid tight non-price credit standards, households sustain a high saving propensity, and unemployment is at record lows though labour shortages and wage growth are easing. The balance of risks stays skewed to higher inflation, with concerns centred on persistent demand strength, elevated expectations and possible worsening external trade terms should global growth or oil prices weaken, while a sharper lending slowdown or easing geopolitical tensions could be disinflationary. The Board signalled that future moves will depend on the speed and durability of disinflation and may be adjusted if fiscal parameters change.
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.