Russia’s central bank cut the country’s benchmark interest rate by 0.50 percentage points to 16.5 percent per year from 16.5 percent, its fifth cut in a row and the same size as the previous meeting in October. The authority said it would continue to keep borrowing costs at a level that restricts economic activity.
The economy continues to return to a balanced growth trajectory and current price growth indicators declined in November, the Russian Central Bank says. However, inflation expectations have increased slightly in recent months.
“The Bank of Russia will keep monetary conditions as tight as necessary for inflation to return to its target. This means that monetary policy will remain restrictive for a long time,” he says. Further decisions on interest rates will be made based on the sustainability of the inflation slowdown and the dynamics of inflation expectations, the statement said.
The Russian Central Bank forecasts that annual inflation, at 5.8% on December 15, 2025, will remain below 6% by the end of 2025 and slow to between 4% and 5% in 2026. In 2027 and subsequent years, the rate is expected to remain within the target, supported by restrictive monetary conditions.
However, “pro-inflationary risks continue to outweigh disinflationary risks in the medium term,” amid a prolonged upward deviation of the Russian economy from a balanced growth trajectory and high inflation expectations, the effects of rising value-added tax (VAT) and administered prices, as well as foreign trade conditions.
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