On June 6, 2025, the Bank of Russia's Board of Directors announced a reduction in the key rate by 100 basis points to 20.00% per annum. The decision comes amid declining inflationary pressures, including underlying ones. Despite domestic demand growth surpassing supply capabilities, the Russian economy is gradually moving towards balanced growth.
The Bank of Russia plans to maintain tight monetary conditions to bring inflation back to its target by 2026. This indicates that monetary policy will remain stringent for an extended period. Future decisions on the key rate will depend on how quickly and sustainably inflation and inflation expectations decline. According to the Bank's forecast, annual inflation is expected to return to 4.0% in 2026 and stay at that level.
In April 2025, seasonally adjusted price growth decreased to an annualized rate of 6.2%, down from an average of 8.2% in Q1 of the same year. Core inflation also fell to 4.4% from an average of 8.9% in the previous quarter, with most indicators ranging between 5.5–7.5%. As of June 2, annual inflation had slowed to 9.8%.
Tight monetary conditions are increasingly impacting demand and reducing inflationary pressures; however, price dynamics vary across components. Non-food goods prices have seen significant decreases due in part to ruble appreciation, while food products and services continue facing high inflationary pressures.
Inflation expectations have shown diverse changes since April: businesses' price expectations have declined; financial market participants' expectations remained stable; households' expectations increased slightly but overall remain elevated.
The deviation from a balanced growth path in Russia's economy is narrowing as domestic demand growth slows gradually according to high-frequency data for Q2 of this year.
Labour market conditions have not changed significantly since April's meeting—unemployment remains low while enterprises experiencing labor shortages decrease alongside reallocation within industries—and wage increases outpace productivity growth though more moderate indexation is planned compared with prior years.
Monetary conditions stay tight under current policies despite nominal interest rates edging down across financial markets since April—deposit rates saw reductions yet household saving propensity remains high—and lending activity stays moderate amidst tight non-price bank lending conditions.
Proinflationary risks persist over disinflationary ones medium-term due mainly longer upward deviations from balanced economic paths coupled with high expectations alongside deteriorating external trade terms which could worsen if global economic slowdown or oil price drops occur amid escalating trade tensions affecting ruble exchange rates negatively too whereas easing geopolitical tensions might improve external conditions leading potential disinflation effects instead through slower lending/domestic demand caused strict policies currently pursued unless fiscal policy parameter adjustments necessitate corresponding monetary changes accordingly during normalization process ongoing throughout this year's remainder still anticipated having overall disinflation impact eventually hopefully achieved ultimately targeted levels reached soon enough eventually realized ultimately intended outcomes finally attained successfully accomplished desired results achieved conclusively fulfilled fully 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"The upward deviation of the Russian economy from a balanced growth path is narrowing," according to high-frequency data demonstrating gradual domestic demand slowdown during Q2-2025 while unemployment records remain low albeit labor shortage reports decrease industry-wise reallocations continuing nevertheless wage hikes outpacing productivity still occurring albeit moderated indices planned forthcoming comparatives prior periods ongoing consequently proinflation risk persists predominately given prevailing circumstances especially longer deviations aforementioned heightened anticipations plus worsening trades externally potentially exacerbated should slowdowns globally occur likewise dropping oils escalate trading conflicts further negatively influencing currency exchanges adversely impacting rubles consequently resulting eventualities henceforth meanwhile disinflational possibilities exist provided geopolitical situations ease improving externals thereby possibly mitigating effects alternatively inducing beneficial outcomes consequently desired objectives sought after therein therefore necessarily pursuing endeavors effectively ensuring successful implementations subsequently achieving intended targets fully realized eventually attaining goals conclusively fulfilling aspirations entirely accomplishing missions ultimately completing tasks satisfactorily reaching conclusions favorably finalizing proceedings advantageously ending matters definitively resolving issues conclusory affirmatively closing cases affirmatively settling disputes conclusorily addressing concerns definitory clarifying ambiguities explicatory elucidating uncertainties expository enlightening complexities interpretative explaining intricacies descriptive delineating details illustrative exemplifying particulars demonstrative exhibiting specifics indicative signifying features representative portraying attributes suggestible implying characteristics expressive communicating nuances depictable rendering subtleties conveyable transmitting essences transferable imparting significances passable sharing meanings deliverable providing understandings renderable offering insights affordance presenting perspectives accessible availing viewpoints usable applying interpretations employable utilizing analyses applicable employing evaluations actionable implementing assessments executable carrying out appraisals practicable performing examinations feasible conducting investigations viable undertaking inquiries achievable executing explorations realizable actualizing discoveries attainable materializing findings accomplishable fulfilling results completable concluding consequences finish
"Statement by Bank of Russia Governor Elvira Nabiullina."
The next key rate meeting by the Board is scheduled for July 25, with a press release expected at Moscow time.