The Bank of Russia on July 24 cut its key interest rate by 0.25 percentage points, from 14.25% to 14% annually.
At the same time, the regulator downgraded its forecast for economic growth in 2026. The central bank now expects Russia’s GDP to grow by 0–1%, compared with its previous forecast of 0.5–1.5%.
Its annual inflation forecast was raised from 4.5–5.5% to 6–7%.
The Bank of Russia noted an acceleration in price growth and an increase in inflation expectations. It cited developments in the fuel market as one contributing factor while stressing that some of the price pressures could be temporary.
The rate cut surprised some analysts who had expected the regulator to leave borrowing costs unchanged because of rising inflation risks.
Despite the slowing economy, a 14% key rate remains high by historical standards. The central bank continues to balance the need to restrain inflation against weakening economic growth.