Published on: 2026-08-05
Source: Central Bank of Russia – Central Bank of Russia –
An important disclaimer is at the bottom of this article.
Material reflects the main points of the discussion on the economy, inflation, monetary and external conditions, as well as options for the key rate decision.
The main topic of discussion was the acceleration of price growth in recent months due to rising fuel costs and its impact on inflation expectations. Most participants believed that there would not be a significant increase in persistent inflation. Nevertheless, inflation this year will be higher than projected in the April forecast.
In the first half of 2026, economic activity grew moderately. Consumption growth accelerated, but there is not yet enough data to consider this process sustainable. The reduction of some production capacities restrained output. According to most participants, the effects of the capacity reduction will be temporary. The expansion of imports and the redistribution of domestic supplies will limit their impact on economic activity.
As for fiscal policy, since its parameters for the medium term have not yet been specified, in preparing the forecast the Bank of Russia proceeded from its own assessment of the trajectory for reducing the structural primary deficit to zero by 2029, taking into account the Government’s public comments.
Following the discussion, the key interest rate was reduced by 25 basis points to 14.00% per annum. The Bank of Russia will make further decisions depending on the inflation dynamics and inflation expectations, as well as the assessment of risks from internal and external conditions.
Given the realized pro-inflationary risks, the room for further reduction of the key rate has narrowed. Therefore, the forecast range for the average key rate over the next 3 years has been raised. Under the influence of the monetary policy being conducted, inflation will return to the target by 2027 and will subsequently remain close to 4%. From 2027 onwards, the economy will sustainably grow by 1.5–2.5% per year.
Read more about the economic developments and the updated forecast in Comments on the medium-term forecast of the Bank of Russia.
Please note; This information is raw content obtained directly from the information source. It represents an accurate report of what the source claims and does not necessarily reflect the position of MIL-OSI or its clients.