Russia’s central bank slashed its benchmark rate unexpectedly by 100 basis points on Friday, as inflationary pressures continued to ease.
The board of directors, governed by Elvira Nabiullina, decided to cut the key interest rate to 20.00 percent from 21.00 percent.
This was the first reduction since 2022. Economists had forecast the bank to maintain the rate at 21.00 percent.
The Russian central bank has raised the key interest rate by 1,350 basis points since July 2023.
The bank said it will maintain monetary conditions as tight as necessary to return inflation to the target in 2026.
Given the monetary policy stance, the bank forecast annual inflation to return to 4.0 percent next year and stay at the target further on.
Further, the bank observed that the upward deviation of the Russian economy from a balanced growth path is narrowing.
Moreover, high-frequency data, including those for the second quarter of 2025, demonstrate a gradual slowdown in domestic demand growth, the bank said.
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