The Bank of Russia lowered its policy rate by 25 basis points to 14.25% at its June 2026 meeting, undershooting the median market expectation of a 50 basis point cut to 14%. The central bank stressed that pro-inflationary risks continue to dominate in the medium term, justifying the need to maintain a restrictive monetary stance. These risks are reinforced by an adverse external environment, including higher global energy prices driven by the war in the Middle East, as well as rising domestic energy prices as Russian refineries come under Ukrainian attack. Inflation expectations are also being pushed up by wage growth outpacing productivity gains.
In addition, the CBR noted that fiscal policy has turned out to be more expansionary than previously assumed, further increasing the need for tight monetary conditions to contain inflationary pressures. Russia’s inflation rate eased to 5.3% in May but remains above the CBR’s 4% target.
