Russia’s Central Bank Cuts Interest Rate

(MENAFN) Russia’s central bank reduced its benchmark interest rate by 50 basis points, bringing it down to 14.5% on Friday. Despite the cut, the institution kept a guarded stance regarding inflation trends and upcoming monetary policy choices.

The Bank of Russia stated that “measures of underlying price growth have not yet decreased,” while also noting that considerable uncertainty still exists surrounding the external economic environment and fiscal policy settings.

Officials indicated that any further reductions in the key interest rate will be evaluated during future meetings, depending on whether the current slowdown in inflation and inflation expectations remains stable.

The central bank also warned, “In case of higher expenditures accompanied by growth in structural budget deficit, tighter monetary policy will be required than that under the baseline scenario,” highlighting potential risks linked to rising government spending.

Although the move represents another phase in the country’s monetary easing cycle, the accompanying statement showed that policymakers continue to worry about enduring inflation pressures and possible fiscal-related risks.

Recent data showed that inflation in Russia eased to 5.77% in April, down from 5.9% in March. Inflation expectations also fell, dropping to 12.9% from 13.4% in the previous month, according to official weekly figures.

The Bank of Russia projects that annual inflation will further decline, reaching between 4.5% and 5.5% in 2026.

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