The regulator lowered the CS to 16%. How the Central Bank's policy developed during the year

At the last meeting in 2025, the Bank of Russia lowered its key rate by 0.5 percentage points to 16% per annum, continuing the cycle of monetary policy easing amid slowing inflation. This is the fifth consecutive rate cut by the regulator since June, when it was at a record level of 21%. All the details are in the Izvestia article.

Why did the Central Bank decide to lower the rate

The Board of Directors of the Bank of Russia made the decision on December 19, citing the return of the economy to a balanced growth trajectory and a steady decline in the current rate of price growth. According to the regulator's assessment on December 15, annual inflation was 5.8%, and by the end of the year it is expected to be below 6%, which is less than the lower limit of the October forecast of the Central Bank. The statement notes that after the impact of the VAT increase and tariff indexation has been exhausted, the price slowdown will continue.

At the same time, the Central Bank points to continuing risks: credit activity remains high, and inflation expectations of the population and businesses have increased in recent months, which may hinder a steady slowdown in inflation. The regulator said it would maintain the tight monetary conditions necessary to bring inflation back to the 4% target in 2026.

Shift at a standstill: Russia warned of the risk of economic stagnation in 2026

How will the key rate affect this and is the slowdown in GDP so dangerous?

How the Central Bank's policy developed during the year

The easing cycle began in June 2025, when the rate was lowered from a record 21% to 20%. Prior to that, since the end of October 2024, the key rate had been held at 21% for several consecutive meetings. The regulator remained cautious, trying to consolidate the slowdown in inflation. In February and March 2025, the Central Bank left the rate unchanged, forecasting year-end inflation at 7-8%.

Subsequent rate cuts in July (to 18%), September (to 17%) and October (to 16.5%) were made as annual inflation declined from 10.3% in April to 8.2% in October. At each stage, the regulator emphasized the need for a cautious approach and the dependence of future decisions on the sustainability of the slowdown in inflation and the dynamics of expectations.

What forecasts and signals does the regulator give?

The Bank of Russia gave a neutral signal on its further actions, indicating that decisions at the next meetings will be made "depending on the sustainability of the slowdown in inflation and the dynamics of inflation expectations." In the baseline scenario, the regulator assumes an average key rate in the range of 13.0–15.0% per annum in 2026, which implies a prolonged period of relatively tight monetary policy.

According to the Central Bank's forecast, annual inflation will decrease to 4.0–5.0% in 2026, and steady inflation will reach the target level of 4% in the second half of the year. In 2027 and beyond, inflation is expected to remain stable near the target.

All important news is on the Izvestia channel in the MAX messenger.