- Decision
- Lower
- Rate change
- 25 bps
- key rate
- 14.25%
The Bank of Russia cut its key rate by 25 basis points to 14.25% on 19 June 2026, saying economic growth was continuing at a moderate pace after an early-year dip and underlying price growth had edged down but remained broadly in the 4% to 5% annualised range, while warning that a more accommodative fiscal stance over the three-year horizon than previously expected could require a higher key rate path than in its April baseline scenario. The central bank said annual inflation was 5.6% as of 15 June and projected it would fall to 4.5% to 5.5% in 2026, with underlying inflation close to 4% in the second half of 2026 and headline inflation at target from 2027 onward. High-frequency data showed activity improved in the second quarter after a first-quarter decline, leaving overall growth moderate in the first half, while consumer demand had sped up, investment remained subdued and lending growth had accelerated in both corporate and retail segments despite still-tight non-price lending conditions. The Bank of Russia said the labour market remained tight, with unemployment at record lows and wage growth still outpacing productivity, while inflation expectations had declined but stayed elevated. It also cited risks from a weaker global economic outlook, rising global price pressures and increased geopolitical tensions, and said it would assess the need for further rate cuts at upcoming meetings based on the sustainability of the inflation slowdown, inflation expectations and risks from external and domestic conditions.
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.