Summary: The Bank of Russia reduced its key interest rate by 50 basis points to 15.5% on Friday as it seeks to bolster an economy that has cooled after previous monetary tightening. Officials emphasised that any additional cuts will be contingent on continued disinflation and the evolution of inflation expectations, and set a baseline outlook for an average key rate of 13.5%-14.5% in 2026.
In the run-up to the decision, just eight of 24 analysts surveyed predicted a 50-basis-point easing, underscoring limited market consensus about the timing and scale of rate relief. The central bank framed its next moves as conditional, saying: "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."
The bank also provided a medium-term reference for monetary policy, stating that "The baseline scenario assumes the average key rate to be in the range from 13.5% to 14.5% per annum in 2026," and added: "This means that monetary conditions will remain tight." That guidance signals a move toward looser policy from current levels, while still keeping rates restrictive by the bank's assessment.
On activity, the bank noted the economy had shown substantial resilience to Western sanctions over the first three years of the conflict in Ukraine but then "slowed down sharply last year after the central bank hiked the key rate to fight inflation." The government projects growth of 1.3% this year, after 1.0% in 2025, while the central bank expects growth of 0.5-1.5% this year.
Officials highlighted a reduction in the economy's excess pace relative to a balanced path, saying: "The upward deviation of the Russian economy from a balanced growth path is decreasing." They also warned that "Growth in domestic demand will moderate in the coming months. Business sentiment demonstrates the same expectations."
The combination of a rate cut, conditional guidance on future easing, and relatively modest growth forecasts frames a cautious monetary stance as the bank balances support for activity with vigilance on inflation and expectations.