The Central Bank of Russia lowered the interest rate by 50 basis points.

Statement on Interest Rate Cut from the Central Bank of Russia

The Central Bank of Russia decided to cut the policy rate by 50 basis points to 16.5%. This is recorded as the fourth consecutive interest rate cut.

What Were Economists’ Expectations?

The median expectation of economists participating in the Bloomberg survey was for the central bank to cut rates by 100 basis points. Half of the economists expected a rate cut, while the others predicted that the rates would remain unchanged.

Upcoming Meetings and Interest Rate Cutting Strategy

The Central Bank of Russia continued to cut rates in the three meetings after June 2025. However, it kept rates unchanged in eight meetings from October 2024 to May 2025.

Impact of Inflation and Gasoline Prices

The bank warned that persistent high inflation expectations could hinder sustainable economic slowdown. It stated that fuel shortages and planned tax increases would also increase inflationary pressure and complicate efforts to achieve the 4% inflation target. In particular, gasoline prices increased by 3% in September and by 2% in October.

The central bank predicts that the plan to raise the value-added tax from 20% to 22% in 2026 to finance rising defense expenditures will impact consumer prices by 0.6-0.8 percentage points.