Russia’s central bank cuts interest rate in a first since 2022
3 Min Read
The Bank of Russia has lowered its key interest rate to 20% amid signs of sustained inflation slowdown. Governor Nabiullina says the regulator remains cautious as it targets 4% inflation by 2026.
-
In this photo taken from a video released by the Russian Central Bank Press Office, Russian Central Bank Chief Elvira Nabiullina holds a regular news briefing after a board meeting where the financial regulator decided to cut the key interest rate to 20%, in Moscow, Russia, on June 6, 2025. (Russian Central Bank Press Office via AP)
The Bank of Russia has lowered its key interest rate by 100 basis points to 20%, marking its first rate cut since 2022. The decision comes as inflation shows signs of sustained decline, following a period of tight monetary policy introduced in response to earlier economic pressures.
Central Bank Governor Elvira Nabiullina announced the move on Friday, highlighting that the elevated interest rate had “led to a significant slowdown in inflation.” She noted that the annualized monthly inflation rate dropped from 7% in March to around 6% in April, which the central bank sees as a stable trend.
However, officials were careful to signal caution. “This should not be viewed as the start of a fast-paced easing cycle,” the Bank stated, reaffirming its commitment to maintaining tight monetary conditions as needed to achieve its 4% inflation target by 2026. Nabiullina also indicated that further rate hikes remain possible if inflation begins to climb again.
The key rate was first raised to 20% in February 2022 in response to external economic shocks, including sanctions, in a bid to stabilize the ruble and counter inflation. It was gradually lowered to 7.5% by late 2022, before renewed inflation prompted a tightening cycle in 2023, with the rate peaking at 21% by October 2024.
Despite imbalances between demand and domestic productive capacity, the Bank of Russia said the economy is on a path toward more stable growth. Russia’s GDP contracted by 1.2% in 2022 but rebounded strongly in the following years, growing by 3.6% in 2023 and 4.1% in 2024. Growth is projected to moderate to between 1–2% in 2025 and up to 1.5% by 2026.
Read more: Head of Russian Central Bank: Sanctions reshaping world economy
Bank of Russia's decision welcomed by experts
Economists have generally welcomed the rate cut.
“This will revitalize key industries and reduce borrowing costs,” said Maxim Chirkov, associate professor at the State University of Management, in comments to Izvestia. Georgy Ostapkovich, director of the Center for Market Research at HSE University, described the decision as “logical and expected,” although he noted the impact on the real economy may take time to emerge. He predicted the rate could drop to 17–18% by the end of the year.
Financial analysts also view the decision as potentially supportive for the national currency. Economist Petr Shcherbachenko of the Financial University told Lenta.ru that a continued decline in inflation could contribute to a stronger ruble over time.
