- Decision
- Lower
- Rate change
- 25 bps
- key rate
- 14%
The Bank of Russia cut its key rate by 25 basis points to 14.00% per annum, saying the economy was growing at a moderate pace and that strong summer price growth and higher inflation expectations were mainly linked to one-off factors, but that temporary declines in production capacities in some sectors and a more expansionary three-year fiscal path than projected in April required a smoother easing cycle. The move followed a 25 bp cut in June and 50 bp cuts in February, March and April, which had lowered the rate from 16.00% in December 2025 to 14.25%. Annual inflation stood at 5.9% as of 20 July, and the central bank now forecasts 2026 inflation at 6.0–7.0% because of higher fuel prices before inflation stays on target from 2027, while revising its 2026 GDP growth forecast down to 0.0–1.0% as consumer demand drove only moderate second-quarter growth and labour market tightness eased gradually, although unemployment remained at record lows. Monetary conditions were assessed as moderately tight, non-price lending conditions remained tight, and lending growth decelerated slightly in June. The central bank said proinflationary risks still outweigh disinflationary ones, including a weaker global outlook and rising global price pressures amid geopolitical tensions, and reiterated that future rate decisions will depend on inflation, inflation expectations and domestic and external risks, with a higher structural primary budget deficit than assumed in its July baseline potentially requiring a tighter policy stance.
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.