- Decision
- Lower
- Rate change
- 100 bps
- key rate
- 17%
The Bank of Russia cut its key rate by 100 bp to 17.00 % on 12 September 2025, judging that tight policy is still required to curb elevated inflation expectations and steer headline inflation—running at 8.2 % on 8 September and with seasonally adjusted price growth of 6.3 % a.r. in July–August—back to the 4 % target by 2026 amid an economy moving toward balanced growth and faster credit expansion. After holding at 21 % early in the year, the central bank has now lowered the rate by a cumulative 400 bp since June (-100 bp in June, ‑200 bp in July, and ‑100 bp in September). It notes that monetary conditions, while somewhat easier following earlier cuts, remain restrictive; market rates have fallen but depositors’ propensity to save is high and lending—especially to corporates—has picked up, with total credit expected to grow near the top of the 7–10 % 2025 forecast range. Core inflation eased to 4.1 % a.r. in July–August, yet most underlying measures stay between 4–6 %, and wages continue to outpace productivity amid record-low unemployment, sustaining pro-inflation pressures. External risks stem from softer global growth, lower oil prices and adverse trade terms, while geopolitical tensions add uncertainty. The central bank reiterates it will keep conditions “as tight as necessary” and calibrate future moves to the durability of disinflation and shifts in expectations; the next rate decision is scheduled for 24 October 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.