Published by Global Banking & Finance Review®
Posted on August 21, 2025
2 min readLast updated: January 22, 2026
The Russian central bank may cut rates if inflation slows, but geopolitical risks and inflationary pressures make a rate cut uncertain this year.
MOSCOW (Reuters) -Russia's central bank may be able to cut its key interest rate from 18% this year if inflation slows rapidly, but it does not rule out holding it at that level in order to achieve a sustainable slowdown in price growth, a senior official said in remarks published on Thursday.
Andrei Gangan, head of the bank's monetary policy department, told the government newspaper Rossiiskaya Gazeta that the baseline forecast was for 6-7% inflation in 2025 and 4% in subsequent years.
He said this implied an average key rate of 16.3-18% from August to December of this year and 12-13% next year.
"The average rate will most likely be in these ranges. However, the specific value, say, at the end of the year, may fall outside this interval," Gangan said.
"For example, if events develop favourably - that is, if inflation slows down rapidly - the rate may decrease further this year, and the forecast range takes this into account."
But he said a rate reduction this year was "not a foregone conclusion", and the bank's forecast did not exclude the possibility of keeping the rate at 18%.
"Inflationary risks remain, including from geopolitics, and we will make further decisions cautiously, based on incoming information."
The central bank has maintained high rates for a long period in a struggle to bring inflation back down towards its target of 4%. Annual consumer price inflation was 8.79% in July, down from 9.40% in June.
Data released on Wednesday showed inflation expectations among Russian households for the year ahead rose to 13.5% in August compared to 13% in July.
(Reporting by Elena Fabrichnaya, writing by Mark Trevelyan, Editing by Alex Richardson)
Monetary policy refers to the actions taken by a central bank to manage the money supply and interest rates to achieve macroeconomic objectives such as controlling inflation and stabilizing the currency.
Inflation is the rate at which the general level of prices for goods and services rises, eroding purchasing power. Central banks attempt to limit inflation to keep the economy running smoothly.
Interest rates are the amount charged by lenders to borrowers for the use of money, expressed as a percentage of the principal. They are a key tool in monetary policy.
A central bank is a national institution that manages a country’s currency, money supply, and interest rates, and oversees the banking system.
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