The Bank of Russia has reduced its key interest rate by 100 basis points to 17.00% per annum, following a decision by its Board of Directors on September 12, 2025. The central bank noted that underlying measures of current price growth have not changed significantly and generally remain above 4% in annualized terms. The Russian economy is continuing to return to a balanced growth path, with lending growth accelerating in recent months and inflation expectations remaining high.
According to the Bank of Russia, monetary conditions will remain as tight as necessary to bring inflation back to target levels in 2026. The central bank stated: "Further decisions on the key rate will be made depending on the sustainability of the inflation slowdown and the dynamics of inflation expectations. According to the Bank of Russia’s forecast, given the monetary policy stance, annual inflation will decline to 6.0–7.0% in 2025, return to 4.0% in 2026 and stay at the target further on."
In July and August, seasonally adjusted price growth averaged 6.3% in annualized terms after reaching 4.4% in the second quarter of 2025. Core inflation decreased slightly to 4.1%, down from an average of 4.4% in the previous quarter. Most indicators of underlying inflation are within a range of 4–6%. As of September 8, annual inflation stood at 8.2%.
The central bank observed that tight monetary conditions continue to contribute to disinflation but noted that recent price growth was affected by one-off factors such as increases in utility rates and motor fuel prices, while fruit and vegetable prices declined more than usual during summer months.
"Inflation expectations have not changed considerably in recent months. In general, they remain elevated. This may impede a sustainable slowdown in inflation," according to the statement.
The deviation of Russia's economy from a balanced growth path is narrowing, with high-frequency data indicating a slowdown in overall economic activity growth for the third quarter of this year, though growth remains positive overall. Business activity varies across industries; export-oriented sectors have seen significant cooling while domestic demand is supported by rising household incomes and government spending.
Labor market tightness remains largely unchanged; surveys show fewer enterprises reporting labor shortages compared with earlier periods. Wage growth has slowed compared with last year but still outpaces productivity gains, while unemployment remains at record lows.
Monetary conditions have eased somewhat but are still considered tight by the central bank’s assessment; interest rates have fallen across most financial market segments due both to previous key rate cuts and changing market expectations regarding future policy moves.
Despite decreasing deposit rates, households continue saving at high levels while lending activity has increased recently—particularly corporate loan portfolio growth—and retail lending is showing some recovery.
The Bank highlighted that pro-inflationary risks outweigh disinflationary ones over the medium term horizon due mainly to continued high inflation expectations and potential deterioration in external trade conditions amid global economic uncertainty and geopolitical tensions.
Fiscal policy normalization planned for next year should help reduce inflationary pressures but has not yet materialized because of this year's accumulated budget deficit. The Bank said it would update its assessment once new budget amendments are submitted for parliamentary review: "Changes in the fiscal policy parameters may require an adjustment in the monetary policy pursued."
A summary of this key rate discussion will be released on September 24, with the next scheduled meeting set for October 24.