- Decision
- Lower
- Rate change
- 100 bps
- key rate
- 20%
The Bank of Russia cut its key rate by 100 bp to 20.00 % on 6 June 2025, judging that waning headline and core price pressures and a gradual easing of excess demand allow some withdrawal of monetary restraint while keeping policy “tight for a long period” to ensure inflation returns to the 4 % target in 2026. After holding the rate at 21 % through February, March and April, the Board has now delivered its first reduction of the year. Despite the cut, the central bank stresses that real rates remain high and non-price lending conditions tight; households keep a strong saving preference and credit growth is moderate. Seasonally adjusted price gains slowed to 6.2 % a.r. in April from 8.2 % in Q1, core inflation eased to 4.4 %, and headline CPI decelerated to 9.8 % as of 2 June, though underlying measures mostly hover between 5.5-7.5 %. Domestic demand is cooling and labour-market tightness is easing slightly even as unemployment stays at record lows and wage growth still exceeds productivity. The stronger ruble has helped curb non-food prices, but pro-inflation risks from persistent demand strength, elevated expectations and potentially weaker external terms of trade continue to dominate. The Board reaffirmed that any further rate moves will hinge on the pace and durability of disinflation and stands ready to adjust policy if fiscal or external conditions shift.
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.