The Bank of Russia cut its key policy rate by 25 basis points to 14.25% per annum on Friday, continuing a cautious easing cycle as underlying inflation slowed and policymakers signalled that further reductions could follow if disinflation persisted across the coming months.
The decision, taken by the Board of Directors on 19 June 2026, took the rate down from 14.5%; Governor Elvira Nabiullina said the Board had considered three options: holding at 14.5% or cutting to 14.25% or 14.0%. The bank said monetary conditions had continued to ease while remaining tight.
UNDERLYING INFLATION IS SLOWING
In its statement, the central bank said underlying price growth had edged down but remained generally in the range of 4–5% in annualised terms. Governor Elvira Nabiullina said faster lending growth and more expansionary fiscal policy had required a more cautious decision.
The bank forecast that annual inflation would decline to a range of 4.5% to 5.5% in 2026, from 5.6% as of 15 June, and stay on target in 2027 and beyond. Even at the lower end, the projected range remains above the central bank's 4% target.
The bank said fiscal policy over the three-year horizon would be more accommodative than previously expected and that lending growth had accelerated, which may require a higher key-rate path than assumed in its April baseline scenario.
FURTHER CUTS TO BE ASSESSED
The board said it would assess the need for further reductions in the key rate at upcoming meetings, keeping open the option of additional cuts if incoming data confirmed the disinflation trend. It said this would depend on the sustainability of the inflation slowdown, the dynamics of inflation expectations and its analysis of risks posed by external and domestic conditions.
The bank said economic growth was continuing at a moderate pace after a temporary decline at the beginning of the year, while unemployment remained at record lows. Nabiullina said rouble appreciation in recent months had contributed to the slowdown in price growth, while a spike in fuel prices would affect inflation in June.
The Bank of Russia targets consumer price inflation of 4% over the medium term and uses the key rate as its principal policy instrument. Nabiullina said neither a further key rate cut nor its size was predetermined at any particular meeting, and that the bank might need to take pauses to analyse incoming information.
The full press release was published on the central bank's English-language website; the next board meeting is scheduled for 24 July 2026. The bank said it would publish a summary of the key rate discussion on 1 July 2026.