The Central Bank has started to regularly reduce the key rate. What you need to know

The Central Bank of Russia has once again lowered its key rate, setting it at 15.5% per annum. The regulator lowered it for the sixth time in a row and signaled a possible further easing of monetary policy in the near future. This allows us to count on a further revival of the Russian economy while maintaining slowing inflation. What you need to know about the current policy of the Central Bank is in the Izvestia article.

How the Central Bank reduces the rate

• At the last meeting of the Board of Directors of the Bank of Russia, it was decided to reduce the key rate by 50 basis points to 15.5% per annum. This is the sixth consecutive continuous reduction in the rate from its maximum value of 21%. Since June 2025, the rate has decreased by 5.5 percentage points, or almost a quarter.

• The current value of the key rate has become the lowest since December 2023, when the Bank of Russia raised it from 15% to 16% at the next meeting. At that time, the Central Bank implemented a tight monetary policy and was engaged in raising the rate from 7.5%, which was in effect from September 2022 to July 2023.

• The Central Bank not only lowered the rate, but also updated its medium-term forecast for the coming years. It is expected that in 2026 it will amount to 13.5–14.5%, in 2027 it will drop to 8-9%, in 2028 — to 7.5–8.5%. The next meeting of the Central Bank, which will decide on the key rate, will be held on March 20.

Why has the Central Bank lowered the rate now

• The key rate is a tool of the Bank of Russia's fight against inflation. It increases if price increases need to be stopped, and decreases if there is no need to contain inflation. In his comment following the meeting, the regulator noted that in January 2026 there was a surge in prices associated with an increase in value added tax (VAT) and excise taxes, tariff indexation and price adjustments for fruit and vegetable products.

• However, this happened after seasonally adjusted price growth slowed to an average of 3.9% in the fourth quarter of last year, falling below the Central Bank's target of 4%. December was marked by a low rate of inflation, and by the end of the year it was below the forecast of the Central Bank, amounting to 5.6%. The regulator assessed the incident as a "redistribution" of inflation between 2025 and 2026. The December slowdown in prices and the January acceleration were in line with the Bank of Russia's expectations, which allowed the current policy to continue.

Why does the Central Bank continue to lower the rate

• The already long cycle of key rate cuts indicates that the Central Bank considers the existing inflation risks manageable. If earlier it was suggested that the nature of inflation in the Russian economy is beyond its competence, now the regulator is confident in its ability to achieve a target of 4% in the foreseeable future.

February frosts: the market expects the key to remain at the level of 16%

Why can the regulator take a break and when will the rate be lowered

• The gradual reduction of the key interest rate also makes it possible to keep the Russian economy in the growth phase, preventing it from cooling due to expensive loans. If the Central Bank had taken a break and kept the rate, while stable inflation indicators do not change significantly, this would have led to the risk of a slowdown in the economy, especially in the segment of small and medium-sized enterprises. The price expectations of enterprises are decreasing, which also makes it possible to reduce the rate more confidently.

• The Central Bank also notes that the current parameters of fiscal policy contribute to a slowdown in inflation. The government's actions to keep expenditures within the budget make it possible to reduce the rate. At the same time, the Central Bank's policy in the future leads to a weakening of the ruble, reducing pressure on exporters and reviving import demand. The weakening of the ruble will have a positive impact on export earnings and will allow us to more confidently expect the execution of the revenue side of the budget.

• At the same time, the Central Bank avoids a sharp rate cut, which could have a number of negative consequences. The regulator is trying to avoid a significant drop in the yields of deposits and bonds, due to which these instruments will cease to be attractive for savings. Therefore, we should expect the same smooth decline in the future, which will prevent the economy from sinking and allow it to restore growth in the medium term.