Financial News: Russia Central Bank Cuts Rate By 25 Bps

Russia Central Bank Cuts Rate By 25 Bps

(RTTNews) - The Bank of Russia reduced its benchmark interest rate by a quarter basis points on Friday, marking the ninth consecutive cut as inflation stays above the target.

The Board of Directors decided to cut the key rate to 14.25 percent from 14.50 percent, the Russian central bank said. Markets had anticipated a 50 basis-point reduction. The bank started its massive monetary policy easing in June 2025, when the interest rate stood at 21.00 percent. The key rate has been lowered by 675 basis points in the current easing cycle.

Despite the rising inflationary pressures, the Bank of Russia maintained its inflation forecast. The bank expects annual inflation to fall to 4.5-5.5 percent this year and the underlying inflation to be close to 4 percent in the second half of the year.

For 2027 and beyond, annual inflation will stabilize at 4 percent target, the bank said.

The bank reiterated that pro-inflationary risks prevail over disinflationary ones on the mid-term horizon.

Pro-inflationary risks increased due to a temporary decline in motor fuel production, while disinflationary risks involve a more significant slowdown in domestic demand, the bank observed.

The bank noted that fiscal policy could support inflation moderation on the medium-term horizon, though structural primary budget deficits persisting until 2029 may necessitate tighter monetary policy than the baseline scenario suggests.

The economy grew at a moderate pace in the first half of 2026, the bank noted. Consumer demand growth improved in recent months, while investment activity remained subdued.

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