Russian central bank conducts huge alterations

(MENAFN) The Bank of Russia has reduced its key interest rate by 100 basis points to 20%, marking its first rate cut since 2022. The central bank cited a slowdown in inflation as the main reason for the move, signaling growing confidence that the downward trend will continue. Governor Elvira Nabiullina reported that the annualized monthly inflation rate fell from 7% in March to around 6% in April.

Despite the cut, the bank emphasized that this does not signal a rapid easing cycle and pledged to keep monetary policy tight enough to achieve its 4% inflation target by 2026. Nabiullina also warned that rates could rise again if inflation picks up.

Following the imposition of Western sanctions in early 2022, the Bank of Russia raised its key rate sharply from 9.5% to 20% to stabilize the ruble and control inflation. After some easing, rates climbed again in 2023 due to renewed inflationary pressures, reaching 21% in October 2024. The bank noted the economy is gradually stabilizing, with growth of 3.6% in 2023 and 4.1% in 2024, although growth is expected to slow to around 1–2% in 2025.

Economists see the rate cut as a positive step that could boost key sectors and lower borrowing costs. Experts also suggested a further reduction to 17–18% by year-end is possible. Currency analysts remain cautiously optimistic that continued inflation declines will strengthen the ruble over time.

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