Central Bank meeting on December 19 on the key rate: expert forecasts

The central bank has been lowering the key rate since June 2025, and four stages of reduction have already passed. At the last meeting in October, the indicator fell from 17 to 16.5%. Further decisions on the key rate will be made depending on the sustainability of the slowdown in inflation and the dynamics of inflation expectations, the Central Bank said in an October release. In November, Russians' inflation expectations rose, while annual inflation slowed. In addition, the factors of the VAT increase from 2026 and the discussion of the peace treaty on Ukraine remain important. For information on how the Bank of Russia can change the key rate at its December 19 meeting, see the Izvestia article.

What is happening in the economy

The Bank of Russia will maintain tight monetary conditions until inflation returns to the target of 4-5%, the Central Bank said in a release following its October meeting on the key interest rate.

"In the baseline scenario, the Central Bank assumes 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," the document says.

At the same time, the Bank of Russia records that the economy continues to grow in a balanced manner.

In November 2025, Russians' inflation expectations rose sharply — 13.3% against 12.6% in September and October, according to an inFOM survey commissioned by the Central Bank. The Central Bank will make decisions on the key rate based on the dynamics of inflation expectations.

The rate level will also depend on the "sustainability of the slowdown in inflation." In November, annual inflation continued to decline and amounted to 6.64%, according to data from the Central Bank and Rosstat. In October, the indicator was at the level of 7.71%, in September — 7.98%, in August — 8.14%. Annual inflation has been decreasing since April.

Nevertheless, the Bank of Russia believes that pro-inflationary risks have increased and prevail over disinflationary ones in the medium term. Among the risks, the Central Bank cites the effect of the VAT increase and the deterioration of foreign trade conditions.

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"A further decrease in the growth rate of the global economy and oil prices in the event of increased trade contradictions may have pro-inflationary effects through the dynamics of the ruble exchange rate. Geopolitical tensions remain a significant factor of uncertainty," the Central Bank said in a statement.

Expert forecasts

In mid-November, Kirill Tremasov, adviser to the head of the Central Bank, stated that at the December meeting of the Bank of Russia, the board of directors could lower or keep the key rate at the same level.

"Taking into account all the prerequisites outlined in our forecast, we say that a rate cut is possible by the end of the year. But it is also possible for the rate to remain unchanged," Tremasov said.

However, according to him, before the December meeting, the regulator should have received "a lot more information" to analyze the inflation situation in the country.

VTB First Deputy Chairman Dmitry Pyanov said in early December that the base scenario for the Central Bank is still considered to leave the rate at the same level of 16.5%. But he did not rule out a decrease to 16%.

Experts interviewed by Izvestia believe that the Central Bank's decisions will be cautious.

— The Bank of Russia has to choose not between good options, but between several imperfect ones. On the one hand, the risks of accelerating price growth remain: the key rate still significantly exceeds actual inflation, but the gap with inflation expectations, which increased after the VAT increase, is no longer so large. On the other hand, the high rate itself begins to work as an inflationary cost factor, limiting supply growth," explains Andrei Chelyuskin, associate Professor at the IGSU Presidential Academy.

According to him, lowering the rate may stimulate pent-up demand, which will be difficult for the economy to respond to, and keeping it at the current level will preserve the situation of underinvestment and the growth of bad debts in industry. Chelyuskin believes that the regulator will discuss reducing the rate to 15.5%, but a more realistic option is about 16%. Inflation and credit dynamics do not cause serious concerns yet and are able to offset the impact of a temporary increase in inflation expectations, the expert notes.

Yaroslav Kabakov, a lecturer at the Higher School of Business of the Higher School of Economics, Director of Strategy at Finam IC, says that, based on current macro dynamics, the most logical decision by the Central Bank is to reduce the key rate by 50 bp to 16%. This is a cautious step that allows us to record a slowdown in inflation without signaling the beginning of a rapid easing cycle.

Valery Boginsky, commercial director of the Partnership Finance crowdlanding platform, considers it a more realistic scenario to keep the rate at the current level with a transition to a decrease in early 2026.

— Several indicators at once confirm the trend towards a gradual reduction in the rate: cooling demand, stabilization of the ruble exchange rate, a decrease in the rate of price growth, and an increase in business expectations regarding the availability of financing. The fact that major market players, including Sberbank, publicly predict a rate cut of about 12% by the end of 2026 also reflects the mood in the upper layers of the economy: business and the financial sector need cheaper money," Boginsky comments.

However, with a rate cut in December, banks will not have time to rebuild their own interest rate models by the end of the year, Boginsky says. Chelyuskin clarifies: banks usually adjust conditions within a week after the meeting, then only point-by-point adjustment of rates for certain periods.

According to Boginsky, geopolitics has significantly less influence on the rate decision today than it did two or three years ago. The economy has adapted to external constraints, rebuilt logistics and payment channels, so external factors play a role only in scenarios of major shocks: sharp currency fluctuations or spikes in inflation expectations, which do not yet exist. Kabakov also believes that the geopolitical context plays an indirect role. The absence of new shocks and the relative stability of the foreign exchange market reduce the need to maintain an extremely strict policy, but they are not an independent factor for mitigation.

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According to Boginsky, the VAT increase may affect the rate. A higher tax burden increases the costs of companies and increases the risk of cash gaps. In such circumstances, it is beneficial for the government to provide businesses with access to cheaper borrowed capital in order to mitigate the transition to new fiscal parameters and avoid an increase in delinquencies. Therefore, a combination of an increase in VAT and a gradual reduction in the key rate looks like a likely policy on the horizon next year, the expert notes.

At the same time, if the key rate decision turns out to be within market expectations, its impact will be minimal, Chelyuskin emphasizes.

— Speculative capital has not had a serious impact on the exchange rate for a long time. The same applies to prices: their dynamics will be determined not by a specific rate value, but by the direction set by the regulator. It is more important for a business to understand how much it will cost to produce a new batch of goods relative to the expected selling price — this is what determines the willingness to increase output," the expert notes.

The beginning of the year, including due to the long holiday weekend, is not accompanied by an acceleration in inflation, Chelyuskin explains. Thus, the current price dynamics will allow the regulator to further ease monetary policy in February.