Published on: 2026-07-24
Source: Central Bank of Russia – Central Bank of Russia –
An important disclaimer is at the bottom of this article.
On July 24, 2026, the Board of Directors of the Bank of Russia decided to reduce key interest rate by 25 basis points, to 14.00% per annum. The economy as a whole grew at a moderate pace in 2Q26. The significant rise in prices and the increase in inflation expectations in the summer months were largely due to one-off factors. The assessment of sustainable inflation indicators remains in the range of 4–5% on an annualized basis. Credit growth slowed slightly in June. Enterprises significantly lowered expectations for future demand and output. At the same time, taking into account the direct and secondary effects of temporary reductions in production capacity in certain sectors and a more stimulative fiscal policy over a three-year horizon than forecast in April, a more gradual reduction of the key rate is required.
The Bank of Russia will make further decisions on the key rate depending on the inflation dynamics and inflation expectations, as well as on the assessment of risks from internal and external conditions. The baseline scenario assumes an average key rate in the range of 14.5–14.6% per annum in 2026 and 10.5–12.5% per annum in 2027. According to the Bank of Russia’s forecast, due to the significant rise in fuel prices that has occurred, annual inflation will be 6.0–7.0% in 2026. Taking into account the monetary policy being conducted, in 2027 and beyond, annual inflation will remain at the target.
In 2k26 current price growth seasonally adjusted averaged 5.0% annualized after 8.7% in Q1 2026 and 4.3% in Q4 2025. The analogous core inflation indicator on average slowed down to 4.2% after 6.2% in the previous quarter and 4.9% in Q4 2025. In June–July the current price growth accelerated. Volatile items significantly influenced price dynamics in recent months. Among them were motor fuel and fruit and vegetable products. The estimate of stable inflation remains in the 4–5% range on an annualized basis. Annual inflation as of July 20 was 5.9%.
Inflation expectations among the population, businesses, and financial market participants have increased. Their persistence at an elevated level may hinder a steady slowdown in inflation.
According to operational data, overall in 2k26 economy grew at a moderate pace. The main contribution to growth came from consumer demand. There was some recovery in investment activity, but overall it remained restrained. At the same time, since June, the impact of a temporary reduction in production capacity on output in certain sectors has increased. In the past month, business expectations for future demand and output have significantly declined. This may also indicate a slowdown in consumption growth in the second half of the year. Overall, the GDP growth forecast for 2026 has been lowered to 0.0–1.0%. The forecast for 2027–2028 remains unchanged.
Labor market tension is gradually easing. According to survey data, the availability of workers for enterprises has improved. Companies’ plans for wage indexation in 2026 have not changed significantly. Wage growth has slowed but continues to outpace labor productivity growth. Unemployment remains at historic lows.
Monetary and credit conditions are assessed as moderately tight. Interest rates have risen in most segments of the financial market. Taking into account the increase in inflation expectations, the tightness of monetary conditions in real terms has decreased slightly. Non-price terms of bank lending remain tight.
Credit activity slowed down in June, mainly due to the dynamics of corporate lending. In contrast, the growth of the retail loan portfolio accelerated. The tendency of households to save decreased somewhat.
Pro-inflationary risks remain predominant over disinflationary ones in the medium term. The main pro-inflation risks are associated with a more significant scale of secondary effects from the temporary withdrawal of production capacities in certain industries. They may arise due to a more pronounced cost pass-through to prices and high inflation expectations. Pro-inflation risks persist, linked to a prolonged period of wage growth at rates exceeding productivity growth, as well as to deteriorating global economic prospects and increasing price pressures worldwide amid geopolitical tensions. Disinflationary risks are connected to a more substantial slowdown in domestic demand.
The Bank of Russia’s July baseline scenario assumes a gradual reduction of the structural primary budget deficit to zero by 2029. The parameters of budget policy, including the trajectory of returning to a zero structural balance, will be further refined in the October forecast after the Government submits new budget drafts for the medium term to the State Duma. If these anticipate a higher structural primary budget deficit, a tighter monetary policy than in the current baseline scenario may be required.
Following the Board of Directors meeting on the key rate on July 24, 2026, the Bank of Russia updated medium-term forecast.
August 5, 2026 The Bank of Russia will publish a Summary of the discussion on the key rate and a Commentary on the medium-term forecast.
The next meeting of the Board of Directors of the Bank of Russia, at which the issue of the key interest rate will be considered, is scheduled for September 11, 2026. The publication time of the press release on the decision of the Board of Directors of the Bank of Russia is 13:30 Moscow time.
When using the material, a reference to the Press Service of the Bank of Russia is mandatory.
24.07.2026 13:30:00
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