The Bank of Russia's board of directors cut the key interest rate by 25 basis points to 14% per annum, marking the 10th reduction since June 2025. The decision defied market expectations: of 24 analysts surveyed by Reuters, 18 had forecast the rate would remain at 14.25%, while six predicted a cut.
In its statement, the central bank acknowledged "significant price growth and an increase in inflation expectations during the summer months" but attributed this to "one-time factors." The regulator said its assessment of underlying inflation indicators remains in the range of 4–5% on an annualized basis.
Ten days before the meeting, President Vladimir Putin said that a rate cut "should be, and will be, a natural process, based on macroeconomic indicators and the stability of the economy," as The Moscow Times reported.
The central bank's new forecast projects an average rate of 14.5–14.6% in 2026 and 10.5–12.5% in 2027. Its inflation forecast for this year was raised to 6–7%, up from the previously expected 4.5–5.5%.
Analysts cited by Reuters pointed to seasonally adjusted inflation accelerating to 10% in June–July, driven by a motor fuel shortage following drone attacks on oil refineries.
The next board meeting on the key rate is scheduled for September 11.