Bank of Russia cuts the key rate by 200 bp to 18.00% p.a.
Central bank: cbr | Type: statement | Date: 2025-07-25

On 25 July 2025, the Bank of Russia Board of Directors decided to cut
by 200 basis points to 18.00% per annum. Current inflationary pressures, including underlying ones, are declining faster than previously forecast. Domestic demand growth is slowing. The economy continues to return to a balanced growth path.
The Bank of Russia will maintain monetary conditions as tight as necessary to return inflation to the target in 2026. In the baseline scenario, this implies an average key rate in the range of
18.8–19.6%
per annum in 2025 and
12.0–13.0%
per annum in 2026 and means that monetary policy will remain tight for a long period. 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
in 2025, return to 4.0% in 2026 and stay at the target further on.
In 2025 Q2, the current seasonally adjusted
price growth
went down to 4.8% in annualised terms from the average of 8.2% in 2025 Q1. The similar indicator of core inflation equalled 4.5% after the average of 8.8% in the previous quarter. As of 21 July, annual inflation was 9.2%. Concurrently, in July, monthly increase in consumer price index will temporarily rise due to the significantly adjusted utility tariffs.
The impact of tight monetary conditions on demand is becoming increasingly evident in decreasing inflationary pressures. The effects of tight monetary policy, including through the ruble appreciation, are more prominently seen in the low growth in prices for non-food products. These effects are becoming gradually evident in decreasing inflationary pressures in the segments of food products and services as well. Price dynamics remain uneven, but the scatter between consumer basket components has slightly narrowed.
A stable downward trend in inflation expectations has not yet formed. Long-term expectations calculated from financial market instruments have slightly decreased. Inflation expectations of analysts and households have seen no significant changes. In July, price expectations of businesses edged up for the first time since the beginning of the year. Overall, inflation expectations remain elevated. This may impede a more sustainable slowdown in inflation.
The upward deviation of the
Russian economy
from a balanced growth path is narrowing. High-frequency data, including those for 2025 Q2, and survey indicators show a further slowdown in domestic demand growth with continued moderate growth of economic activity in general.
Monetary conditions
remain tight under the impact of the monetary policy pursued and autonomous factors. Since June, nominal interest rates have declined in most segments of the financial market following the key rate cut and the revision of market participants’ expectations for its further path, but they are still high in real terms. Non-price bank lending conditions remain tight as well.
Although deposit rates have decreased, households continue to demonstrate high propensity to save. Lending dynamics are uneven across segments. Unsecured consumer lending is shrinking, while the portfolio of mortgage and corporate loans is moderately increasing. Lending activity remains generally subdued.
Proinflationary
prevail over disinflationary ones in the
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, 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 lending growth and domestic demand under the impact of tight monetary conditions.
The Bank of Russia takes into account the announced parameters of fiscal policy. Its normalisation in 2025 will have a disinflationary effect. Changes in the fiscal policy parameters may require an adjustment in the monetary policy pursued.
Following the Board of Directors’ key rate meeting on 25 July 2025, the Bank of Russia has updated its
medium-term forecast
On 6 August 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 will hold its next key rate meeting on
12 September 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 25 July 2025
25.07.2025 13.30.00