The Bank of Russia cut its key policy rate by 25 basis points to 14.0% at its July 2026 meeting, in line with market expectations, extending the easing cycle that began after the rate peaked at 21% in June of last year. The central bank noted that overall monetary conditions remain moderately tight, even with real interest rates at elevated levels.
Economic growth in 2026 has so far been only moderate: strong consumer demand has been largely offset by weakening productive capacity in key sectors. This deterioration has been driven in part by fuel shortages following Ukrainian strikes on major Russian refineries. As a result, recent figures showed the first year‑on‑year decline in GDP in three years in the first quarter.
At the same time, the Bank of Russia reported that underlying inflation has remained broadly stable, hovering near its 4% target. It assessed the recent spike in fuel prices as temporary and one‑off, although policymakers emphasized that they remain alert to rising inflation expectations, particularly in light of the government’s widening budget deficit.
