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Russian Central Bank Slashes Key Interest Rate by 200 Basis points
Moscow, Russia – July 25, 2025 – The Central Bank of the Russian Federation announced today a significant reduction in its key policy rate, lowering it from 20% to 18%. This marks the largest single interest rate cut implemented by the bank since May 2022.
The move aligns with expectations, as reported by Reuters. In a statement,the central bank cited a faster-than-anticipated decrease in current inflation pressures,including underlying inflation,and a slowdown in domestic demand growth as key factors influencing the decision.In conjunction with the rate cut,the bank has also revised its inflation forecast for 2025 downward. the previous projection of 7-8% has been adjusted to a range of 6-7%.
Russia’s economic landscape in recent years has been significantly shaped by the ongoing conflict in Ukraine and substantial expenditures within the defense sector. Approximately two years ago, the central bank implemented stringent interest rates as a measure to combat economic overheating stemming from increased military spending.
According to Reuters, the buisness community had been exerting considerable pressure on the central bank to reduce interest rates, with business leaders expressing concerns that high rates were hindering investment profitability.
Prior to the official proclamation, Deputy Prime Minister Marat Khusnullin, who oversees the construction sector, indicated that a four-percentage-point reduction would have been preferable.He anticipates that interest rates could fall to between 10% and 12% by the close of the current year.
The central bank, under the leadership of Elvira Nabiullina, has maintained its economic growth forecast for Russia in 2025, projecting a range of 1-2%. This follows a reported growth of 4.3% in the previous year.
