FX.co ★ Bank of Russia Cuts Rate by 200bps

The Bank of Russia reduced its key interest rate by 200 basis points to 18% during its July 2025 meeting, aligning with the median market expectations. The central bank indicated that it is likely to implement another rate cut within the year. The bank highlighted that disinflationary pressures have intensified more than anticipated since the last policy decision in June, necessitating a loosening of financial conditions to address growth concerns. Recent data revealed that annual inflation stood at 9.4% in June. In addition to disinflationary factors, the Bank of Russia noted that the impact of high borrowing costs is becoming increasingly perceptible due to the strengthening of the ruble and a slowdown in household consumption. Furthermore, there are ongoing indications of a weakening labor market, despite the continual decrease in the labor force. This decrease is primarily attributed to the exodus of working-aged men caused by President Putin's military mobilization.