Central Bank of Russia cuts key rate by 25 basis points to 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 f