Russia Lowers Key Interest Rate to 19-Month Low
Markets had widely anticipated policymakers would hold borrowing costs steady at 16%, making the cut an unexpected move that marks the sixth consecutive reduction.
The policy rate now sits at its lowest level since June 2023, capping a sustained easing cycle by Moscow's monetary authorities.
"In January, price growth accelerated significantly due to one-off factors. However, the Bank of Russia estimates that the underlying measures of current price growth have not changed considerably," the central bank said in a statement.
Officials stressed that disinflationary trends will persist once temporary pressures dissipate.
"The Bank of Russia will assess the need for a further key rate cut at its upcoming meetings depending on the sustainability of the inflation slowdown and the dynamics of inflation expectations," it noted.
The Central Bank of Russia's projections indicate the policy rate will settle between 13.5% and 14.5% throughout this year. "This means that monetary conditions will remain tight."
Annual inflation is forecast to decline to a 4.5–5.5% range in 2026, with price growth returning to the central bank's 4% target in 2027 and subsequent years.
Rate trajectory
The Central Bank of Russia had pushed its benchmark rate to 20% immediately following the Russian-Ukrainian conflict's eruption.
Rates remained frozen at 16% from late 2023 through July 2024, following four successive increases earlier that year.
June marked the first reduction since September 2022, with the bank lowering rates from 21% to 20%, then to 18% in July, 17% in September, 16.5% in October, and 16% at its most recent decision.
While annual inflation eased to 5.6% in December 2025, authorities are targeting a 4% rate.
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