Bank of Russia cuts the key rate by 50 bp to 16.50% p.a.

On 24 October 2025, the Bank of Russia Board of Directors decided to cut the key rate by 50 basis points to 16.50% per annum. Underlying measures of current price growth have not changed significantly and remain above 4% in annualised terms. The economy continues to return to a balanced growth path. Lending growth has accelerated in recent months. Inflation expectations remain high.

The Bank of Russia will maintain monetary conditions as tight as necessary to return inflation to the target. In the baseline scenario, this also implies an average key rate in the range of 13.0–15.0% per annum in 2026 and means a long period of tight monetary policy. Further decisions on the key rate will be made depending on the sustainability of the inflation slowdown and the dynamics of inflation expectations. According to the Bank of Russia’s forecast, given the monetary policy stance, annual inflation will decline to 4.0–5.0% in 2026. The upward revision of the 2026 forecast is associated with one-off proinflationary factors. Underlying inflation will reach 4% in 2026 H2. In 2027 and beyond, annual inflation will stay on target.

In 2025 Q3, the current seasonally adjusted price growth was up to 6.4% in annualised terms after 4.4% in 2025 Q2. The similar indicator of core inflation equalled 4.3% after 4.4% in the previous quarter. Most indicators of underlying inflation are in the range of 4–6% in annualised terms. Annual inflation stood at 8.2% as of 20 October and is expected to be in the range of 6.5–7.0% by the end of 2025. 

The current price growth acceleration was substantially affected by one-off factors. They include increased motor fuel prices and a faster-than-usual rise in fruit and vegetable prices in the autumn months. Price dynamics remain uneven across consumer basket components.

Inflation expectations remain elevated. This may impede a sustainable slowdown in inflation. 

According to the Bank of Russia, the current inflationary pressures will temporarily increase in late 2025 and early 2026 because of a number of factors, including price adjustments and the reaction of inflation expectations to the upcoming VAT rise. As these factors fade, disinflation will continue. This will be supported by tight monetary conditions.  

The upward deviation of the Russian economy from a balanced growth path is narrowing. High-frequency data and survey indicators show a slowdown in overall economic activity growth in 2025 Q3, while the growth rate is still positive. The dynamics of business activity is uneven across industries. A significant cooldown is recorded in export-oriented industries. Domestic demand is backed up by rising household incomes and budget expenditures. Consumer activity growth has sped up somewhat.

The labour market remains tight. Wages rise more slowly than in 2024, but their growth rate is still outpacing the growth in labour productivity. Unemployment is at its record lows. Nevertheless, according to surveys, the share of enterprises experiencing labour shortages shrinks gradually.

Monetary conditions remain tight in general. In August–September, lending and deposit rates continued to adjust to the earlier monetary policy easing. Money and debt market rates have risen since mid-September, reflecting an upward revision of market participants’ expectations for the future key rate path. In real terms, interest rates have not changed notably in recent months. Non-price bank lending conditions are still tight. 

Households continue to demonstrate high propensity to save. The retail loan portfolio growth is generally moderate. In 2025 H2, corporate lending has been growing much faster than in 2025 H1. The forecast for growth in claims on the economy this year has been increased to 8–11%.

Proinflationary risks have increased and prevail over disinflationary ones in the mid-term horizon. The key proinflationary risks are associated with a longer upward deviation of the Russian economy from a balanced growth path and high inflation expectations, the effects of the VAT increase, as well as with the deterioration in the terms of external trade. A further decrease in the growth rate of the global economy and oil prices in case of escalating trade disputes may have proinflationary effects through the ruble exchange rate dynamics. Geopolitical tensions remain a significant uncertainty factor. Disinflationary risks involve a more significant slowdown in domestic demand.

The Bank of Russia takes into account the announced parameters of fiscal policy. The disinflationary impact of the 2025 budget will be considerably smaller than previously expected. In the mid-term horizon, fiscal policy will help slow down inflation. Changes in the fiscal policy parameters may require an adjustment in the monetary policy pursued. 

Following the Board of Directors’ key rate meeting on 24 October 2025, the Bank of Russia has updated its medium-term forecast.

On 6 November 2025, the Bank of Russia releases the Summary of the Key Rate Discussion and the Commentary on the Medium-term Forecast.

The Bank of Russia Board of Directors holds its next key rate meeting on 19 December 2025. The press release on the Bank of Russia Board decision is to be published at 13.30 Moscow time.

Statement by Bank of Russia Governor Elvira Nabiullina in follow-up to Board of Directors meeting on 24 October 2025

The reference to the Press Service is mandatory if you intend to use this material.

24.10.2025 13.30.00