- Decision
- Lower
- Rate change
- 50 bps
- key rate
- 16%
The Board of Directors of the Bank of Russia cut the key rate by 50 bp to 16.00 % on 19 December 2025, judging that disinflation is taking hold—seasonally adjusted monthly price growth slowed to an annualised 4.6 % in October-November from 6.6 % in Q3 and annual inflation eased to 5.8 % by 15 December—yet noting still-elevated inflation expectations and brisk credit expansion that keep pro-inflationary risks dominant. After cumulative reductions of 500 bp since June, when the rate stood at 21.00 %, the central bank reiterated that monetary conditions will stay “tight for a long period” and that subsequent moves will hinge on the durability of the inflation slowdown and shifts in expectations. Market and OFZ yields as well as lending rates have fallen, but non-price credit terms remain restrictive. The economy is moving back toward balanced growth, supported by rising household incomes, strong corporate lending—especially in H2—and ongoing fiscal spending; labour-market tightness is easing although unemployment is still at record lows and wage growth exceeds productivity. External trade terms have weakened and lower global growth or oil prices amid escalating trade disputes, alongside persistent geopolitical tensions, are cited as upside risks to inflation via the ruble. The Bank projects headline inflation at 4.0-5.0 % and core inflation at 4 % in 2026, and affirms that any fiscal-policy shifts could prompt a monetary response, with the next rate decision scheduled for 13 February 2026.
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.