The board of the Central Bank of Russia (CBR) resolved to cut the key interest rate by 50 basis points (bp) to 15% at the policy meeting on March 20, according to a press release from the regulator.

This was the seventh consecutive cut since June 2025 and a continuation of a cautious monetary easing cycle amid the markedly slowing Russian economy.

The race cut decision was widely expected by the market, as inflation normalised after peaking at the beginning of 2026. 

While the CBR managed to curb inflation below 6% in 2025, a spike in inflation was seen at the beginning of 2026, mostly due to regulatory changes and the VAT hike.

Nevertheless, the CBR surprised the market and resolved to cut the key interest rate by 50 bp from 16% to 15.5% at the first policy meeting of 2026 on February 13. The regulator dismissed the spike in inflation, commenting that “in January, price growth accelerated significantly under the influence of one-off factors”.

At the latest policy meeting the board of the CBR was aligned with market expectations, as “a broad consensus was formed around reducing the rate by 50 bp, although there were also individual proposals to keep the rate unchanged and to reduce it by 100 points,” Governor of the CBR Elvira Nabiullina said at the press conference following the key rate decision.

In the latest press release the CBR reiterated that inflationary pressures have moderated after an earlier acceleration, noting that “price growth has predictably slowed,” while “sustainable indicators of current price growth remain in the range of 4-5% on an annualised basis”. 

At the same time, the regulator warned that “uncertainty from external conditions has increased significantly”.

The regulator maintained its inflation forecast of 4.5-5.5% for 2026, with the policy target of 4% inflation planned to be reached in 2027.

Nevertheless, the CBR stressed that risks remain skewed to the upside, stating that “pro-inflationary risks still prevail over disinflationary ones in the medium term”. 

“The main pro-inflationary risks are associated with worsening global economic prospects and increased global price pressures amid rising geopolitical tensions, as well as a more prolonged deviation of the Russian economy above its balanced growth path and high inflation expectations,” the CBR noted.

In line with latest data covered by bne IntelliNews, the regulator also pointed to emerging signs of cooling demand and economic activity in early 2026, noting that “there is some cooling of consumer demand after strong dynamics at the end of 2025,” while “business sentiment also indicates more restrained domestic demand”. 

The CBR remained wary of sticky inflation expectations and warned, same as previously, that “persistently elevated inflation expectations may hinder a sustainable slowdown in inflation”.

Analysts surveyed by RBC broadly viewed the decision as expected and consistent with the ongoing easing trajectory, but warn that the key question going forward is the fiscal path the government will take, particularly regarding potential changes to the budget rule. 

Nabiullina commented that the current weakening of the ruble as a potential pro inflationary factor does not concern the regulator, while the real risks stem from two “significant factors of uncertainty”, the war in the Middle East and a possible adjustment of fiscal policy.

Concerning the former, Nabiullina warned that disruptions in global demand, investment, supply chains, higher inflation in energy importing countries could become a “supply shock” that will affect global costs and may partly be passed on to prices in the Russian market.

“The overall effect for the Russian economy will depend on the duration and scale of these geopolitical events,” she believes. Regarding the ruble exchange rate, she noted that it has weakened in recent weeks, but “it is premature to speak of a pronounced trend”.

The internal risk concerning the CBR is linked to signals from the government about a possible adjustment of the budget framework. 

As followed closely by bne IntelliNews, as the cash-strapped government prepares to revise the so-called “budget rule” the so-called “budget rule”, this month the CBR again reminded that it will not accept any fiscal easing unconditionally.  

Nabiullina reiterated that “if spending decreases but revenues decline even more, meaning the structural budget deficit increases and is financed by additional borrowing… then this is a factor that will act towards increasing inflation and will require a higher key [interest] rate”. 

The next CBR policy rate meeting is scheduled for April 24.

Renaissance Capital analysts commented that although “the scale of changes in fiscal policy for this year and the potential response of the CBR to these changes remain uncertain,”  the regulator could continue cautious cutting of the key rate. 

The baseline forecast is consecutive cuts of 50bp at upcoming policy meetings, lowering the key rate to 12-13% by the end of 2026.