Russian Central Bank Lowers Key Interest Rate by 200 Basis Points
(MENAFN) The Russian Central Bank sharply cut its key interest rate by 200 basis points to 18% on Friday, signaling a faster-than-expected easing of inflationary pressures. This marks the second consecutive reduction, bringing the rate to its lowest level in nine months.
"Current inflationary pressures, including underlying ones, are declining faster than previously forecast," the bank said in an official statement.
The bank highlighted a deceleration in domestic demand growth and emphasized that the economy is steadily returning to a balanced growth trajectory. It reiterated its commitment to maintaining tight monetary policy as needed to bring inflation back to target levels by 2026.
"In the baseline scenario, this implies an average key rate in the range of 18.8–19.6% per annum in 2025 and 12.0–13.0% per annum in 2026 and means that monetary policy will remain tight for a long period," the Central Bank added.
Forecasts indicate inflation is expected to fall to 4% next year under the current monetary policy framework.
Following the outbreak of the Russian-Ukrainian War, the Central Bank had initially raised its policy rate to 20%. After holding steady at 16% from late 2023 until July 2024, the bank implemented four successive interest rate hikes in 2024.
In June, the institution reduced the rate for the first time since September 2022, lowering it from 21% to 20%.
Despite an annual inflation rate of 9.4% recorded in June, the bank remains focused on its goal of cutting inflation down to 4%.
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