The Russian Central Bank reduced its key interest rate to 16.5% on Friday, down from 17%, marking the fourth consecutive cut since June. The bank has been easing policy from a wartime peak of 21% as the economy shows signs of slowing.
While businesses have criticized high borrowing costs for stifling growth, the central bank stressed that elevated rates are necessary to curb inflation, which remained above 8% in October due to rising fuel prices and seasonal food costs. Officials indicated that the 4% inflation target may only be achieved by 2026-2027.
Analysts noted that the updated outlook anticipates rates averaging 13%-15% in 2026. The regulator said future rate decisions will depend on the pace of inflation slowdown and inflation expectations. Russia’s MOEX stock index briefly rose following the announcement but fell to its weakest level in over a week. The next rate decision is scheduled for December 19.