Russia Cuts Interest Rate to 16%

2025-12-19 10:40 By Agna Gabriel 1 min. read

The Bank of Russia cut its benchmark interest rate by 50bps to 16% on December 19, 2025, in line with market expectations, reflecting progress in disinflation amid a gradual return of the economy to a more balanced growth path.

Recent data show a slowdown in current and underlying price growth, with seasonally adjusted inflation easing notably in October–November, while annual inflation is expected to fall below 6% by year-end.

However, inflation expectations have edged higher and remain a key concern, alongside still-robust lending activity and uneven price dynamics driven by volatile items such as fuel and food.

The central bank stressed that monetary policy will remain tight for a prolonged period to ensure inflation returns sustainably to target.

Inflation is forecast to decline to 4–5% in 2026, with underlying inflation reaching 4% in H2.

Economic growth continues at a moderate but uneven pace, supported by domestic demand, while labour market tightness is easing only gradually.



News Stream
Russia Unexpectedly Cuts Interest Rate
The Bank of Russia cut its benchmark interest rate by 50bps to 15.5% in its first meeting of 2026, contrasting with the median market survey of a hold, to address growth concerns in the Russian economy. The CBR cut its rate despite the reacceleration in consumer prices according to the latest data, noting that that recent price pressures were largely due to one-off events and the disinflation process will likely continue throughout the year. The central bank also noted that it did not see evidence of a substantial pass-through of the new VAT measures in large portions of the domestic consumer basket, limiting earlier concerns that higher taxes would be inflationary. Meanwhile, the CBR noted that growth slowed in the fourth quarter and that the labor market tightness is gradually decreasing. Additionally, the elevated real rates, strong ruble, and high OFZ yields in the long end maintained restrictive financial conditions and warranted lower rates.
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Russia Cuts Interest Rate to 16%
The Bank of Russia cut its benchmark interest rate by 50bps to 16% on December 19, 2025, in line with market expectations, reflecting progress in disinflation amid a gradual return of the economy to a more balanced growth path. Recent data show a slowdown in current and underlying price growth, with seasonally adjusted inflation easing notably in October–November, while annual inflation is expected to fall below 6% by year-end. However, inflation expectations have edged higher and remain a key concern, alongside still-robust lending activity and uneven price dynamics driven by volatile items such as fuel and food. The central bank stressed that monetary policy will remain tight for a prolonged period to ensure inflation returns sustainably to target. Inflation is forecast to decline to 4–5% in 2026, with underlying inflation reaching 4% in H2. Economic growth continues at a moderate but uneven pace, supported by domestic demand, while labour market tightness is easing only gradually.
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Russia Unexpectedly Cuts Interest Rate
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