Measure it seven times: The Central Bank may slow down the key rate cut due to the conflict in Iran

The Bank of Russia lowered its key rate to 15% following a meeting on March 20, but further monetary policy easing may be slower, analysts polled by Izvestia believe. The regulator's decision is increasingly influenced by external risks, including the conflict in Iran — without this factor, the Central Bank would have been more active in discussing a rate cut to 14.5%, the head of the regulator, Elvira Nabiullina, answered a question from Izvestia. In such conditions, by the end of the year, the key rate may be only at the level of 12%, experts say. How banks will react to this and why loans remain expensive is in the Izvestia article.

Why did the Central Bank lower the key rate to 15%

On March 20, 2026, the Board of Directors of the Bank of Russia lowered the key rate by 0.5 percentage points for the seventh time in a row and set it at 15% per annum. In a press release, the regulator noted that price growth slowed down in February, as expected, after a surge in January, and stable inflation rates remain in the range of 4-5% in annual terms.

However, the Central Bank's signal on further policy has tightened. The regulator directly pointed to the growing uncertainty from external conditions and stressed that it would assess the need for further rate cuts at each meeting separately. There is no clear signal of continued rapid easing right now.

Annual inflation as of March 16 is estimated at 5.9%, the Central Bank recalled. Despite the slowdown in February, inflation expectations remain elevated and this holds back the rate cut.

At the same time, the economy is gradually cooling down: consumer demand is slowing down after strong growth at the end of 2025, and labor market tensions are decreasing. At the same time, unemployment remains at lows of about 2.2%, and wages are growing faster than productivity.

The Central Bank separately noted that among the risks of rising prices, the prospects for the global economy and increased price pressure in the world are important against the background of increasing geopolitical tensions.

The situation in the Middle East has a significant impact on market conditions, said Central Bank Governor Elvira Nabiullina. High oil and gas budget revenues support the ruble exchange rate, but the conflict itself creates a significant uncertainty factor.

"The effects will depend on how long the conflict drags on," she stressed.

The Central Bank will make its next decision on the key rate on April 24, 2026.

How the Iranian conflict affects the policy of the Central Bank

The conflict in the Middle East is really important when making decisions on a key issue, Elvira Nabiullina said in response to a question from Izvestia. It may not be the only reason for the slowdown in the rate cut, but without it, the Central Bank could consider a more rapid policy easing.

— If this factor did not exist, then, probably, today we would be more actively discussing a reduction in the key rate by one percentage point (to 14.5% — Ed.), — she specified.

For the Bank of Russia, this is primarily an external inflationary shock, said Vladislav Nikonov, founder of the Finbazar financial platform. Against the background of the escalation, oil and gas prices rose sharply, uncertainty increased, and this affects inflation expectations, the ruble exchange rate and logistics.

According to him, such factors force the Central Bank to act more cautiously. On March 19, the price of oil rose above $114 per barrel, while supply disruptions were recorded. This creates risks for the global market: logistics chains are disrupted, import costs are rising, and public expectations of rising prices are increasing. Together, this increases the risk of accelerating inflation, even if the ruble remains stable.

At the same time, the national currency has been weakening in recent weeks amid news about changes in the parameters of the budget rule. After reports of changes in the cut—off price, an indicator that determines the share of oil and gas windfalls that go out of circulation and into the pot, the national currency weakened by more than 5% and is now trading at above 83 per dollar.

The weakening of the ruble leads to an increase in the cost of imports and an acceleration of inflation, said Ivan Efanov, an analyst at Cifra Broker. In such a situation, the Central Bank will be forced to act more cautiously and tighten its rhetoric.

The conflict in Iran is of an inflationary nature for the global and Russian economies, while it has not yet caused a change in decisions at the March meeting, but its consequences may manifest themselves later, according to Ilya Fedorov, chief economist at BCS World Investments.

A tougher scenario is possible with a prolonged escalation, when energy supplies and logistics will suffer even more, says Olga Belenkaya, head of the Macroeconomic Analysis Department at Finam. In this case, food, industrial products, transport and services will become more expensive, and the supply of imported goods may decrease.

Under these conditions, the regulator may take a break if inflation starts to rise and the ruble weakens, said Natalia Milchakova, a leading analyst at Freedom Finance Global. This is a standard reaction to increased inflation risks.

Will banks accelerate rate cuts

The Central Bank's decision is already affecting the market, but the effect is unevenly distributed, explained Vladislav Nikonov, founder of the Finbazar financial platform. Deposit rates are falling faster and in many ways have already won back expectations, while loans are getting cheaper more slowly.

Currently, real rates on consumer loans reach 31% per annum, Izvestia wrote. Over the year, they decreased by only 3.2 percentage points, although the key one fell by 6 percentage points. At the same time, the yield on deposits decreased by about 7 percentage points and is about 13.5%. This means that the gap between the cost of loans and the return on deposits remains high.

A faster rate reduction is possible only if several conditions are met simultaneously, Vladislav Nikonov emphasized. These include:
— inflation has been below the Central Bank's forecast for several months in a row;
— steady decrease in expectations of price growth on the part of the population;
— absence of new pro-inflationary factors from the budget, exchange rate and the external environment;
— further cooling of lending and domestic demand.

So far, these conditions have not been implemented, so the Central Bank adheres to a more cautious scenario. The regulator's official forecast assumes an average key rate of 13.5–14.5% in 2026, indicating a smoother decline than previously expected.

If there are no new shocks, the rate may drop to 12% by the end of the year, says David Grigoriev, a leading investment consultant at Gazprombank Investments. However, even in this case, loans will become cheaper gradually, and their cost will remain noticeably higher than pre-crisis levels.