Moscow, July 25 Russia’s central bank has cut its key interest rate by 200 basis points, bringing it down from 20% to 18%. This marks the largest rate cut since May 2022 and signals a shift in economic strategy as inflation begins to ease.
The decision came amid growing calls from businesses and government officials who argued that the previous high rates were holding back lending and investment. The Bank of Russia said that inflation is slowing faster than expected, which allowed room for a bigger rate cut.
The central bank also lowered its inflation forecast for 2025 from 7–8% to 6–7%. For the first time in months, weekly prices fell slightly, and annual inflation is now estimated between 9.2% and 9.4%, down from over 10% earlier this year.
Despite this easing, the Bank maintained its economic growth projection at 1–2% for 2025, down from 4.3% in 2024. Governor Elvira Nabiullina stated that further rate cuts are possible this year, depending on inflation data. She stressed that the goal remains to bring inflation back to 4% by 2026.
The ruble weakened slightly after the announcement, settling around 80 per U.S. dollar. The bank also adjusted its oil price forecast for 2025 from $60 to $55 per barrel, reflecting a more cautious view of export revenues.
Nabiullina added that Russia’s banking system remains strong and does not currently need government support, even with a rise in overdue loans.
This significant rate cut is expected to boost borrowing, lower costs for consumers, and help revive economic activity while still keeping inflation under control.
Key Takeaways:
- Interest Rate Cut: Reduced from 20% to 18% biggest since May 2022
- Inflation Forecast: Lowered to 6 to 7% for 2025
- Growth Outlook: GDP growth expected to slow to 1 to 2% in 2025
- Further Cuts Possible: Dependent on continued inflation trends
- Ruble Reaction: Slight weakening to 80 per USD
- Oil Forecast: Lowered to $55 per barrel for 2025
- Banking Sector: Remains stable, no current need for state aid
