- Decision
- Lower
- Rate change
- 50 bps
- key rate
- 15%
The Bank of Russia lowered its key rate by 50 bp to 15.00% per annum, saying the economy is moving towards a balanced growth path while February data confirmed a predictable easing in price pressures, with underlying inflation running at an annualised 4–5 % and headline inflation at 5.9 % as of 16 March. After cumulative cuts of 600 bp since March 2025, monetary conditions have softened yet remain tight, with market rates down, non-price lending terms still restrictive and lending growth only moderate amid a continued household preference for saving. Seasonally adjusted price growth averaged 10.2 % annualised in January-February versus 4.4 % in 2025 Q4 but slowed markedly in February as one-offs faded; the central bank still projects headline inflation at 4.5–5.5 % this year and core inflation near 4 % in H2. High-frequency indicators show cooling consumer demand and softer business sentiment, while labour shortages and wage indexations are easing even though unemployment stays at historic lows and wage growth exceeds productivity. The authorities flag heightened external uncertainty, citing a weaker global outlook, broader price pressures and rising geopolitical tensions as key pro-inflation risks, which continue to outweigh disinflationary forces. The Board will decide on further rate cuts after assessing the durability of the inflation slowdown, shifts in inflation expectations and the balance of external and domestic risks, noting that fiscal policy should aid disinflation over the medium term but any fiscal changes could prompt a monetary policy adjustment.
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.