MOSCOW, October 24. /TASS/. The Bank of Russia has decided to reduce the key interest rate for the fourth consecutive time, this time by 0.5 percentage points, bringing it to 16.5%, stating that it will maintain a level of monetary policy as tight as necessary to return inflation to its target, according to the regulator’s press release.
"On October 24, 2025, the Bank of Russia Board of Directors decided to cut the key rate by 50 basis points to 16.50% per annum. Underlying measures of current price growth have not changed significantly and remain above 4% in annualized terms. The economy continues to return to a balanced growth path. Lending growth has accelerated in recent months. Inflation expectations remain high," the document reads.
"The Bank of Russia will maintain monetary conditions as tight as necessary to return inflation to the target. Further decisions on the key rate will be made depending on the sustainability of the inflation slowdown and the dynamics of inflation expectations," the regulator said.
The Bank of Russia also narrowed its forecast corridor for the average key rate until the end of 2025 to 19.2% from 18.8-19.6%. At the same time, according to the regulator, the forecast has been raised for 2026 to 13-15% from 12-13%, and maintained at 7.5-8.5% for 2027 and 2028.
Meanwhile annual inflation is expected to decrease to 4-5% in 2026, the Central Bank said, adding that in 2027 and beyond, annual inflation will stay on target. "According to the Bank of Russia’s forecast, given the monetary policy stance, annual inflation will decline to 4-5% in 2026. The upward revision of the 2026 forecast is associated with one-off proinflationary factors. Underlying inflation will reach 4% in 2026 H2. In 2027 and beyond, annual inflation will stay on target," the press release said.
"According to the Bank of Russia, the current inflationary pressures will temporarily increase in late 2025 and early 2026 because of a number of factors, including price adjustments and the reaction of inflation expectations to the upcoming VAT rise. As these factors fade, disinflation will continue. This will be supported by tight monetary conditions," the regulator noted.
"The upward deviation of the Russian economy from a balanced growth path is narrowing. High-frequency data and survey indicators show a slowdown in overall economic activity growth in 2025 Q3, while the growth rate is still positive. The dynamics of business activity is uneven across industries. A significant cooldown is recorded in export-oriented industries. Domestic demand is backed up by rising household incomes and budget expenditures. Consumer activity growth has sped up somewhat," the Central Bank added.
That said, the labor market remains tight, wages rise more slowly than in 2024, but their growth rate is still outpacing the growth in labor productivity. Unemployment is at its record lows. Nevertheless, according to surveys, the share of enterprises experiencing labor shortages shrinks gradually.
Russia’s economic growth is expected at 0.5-1% by the end of 2025. The Central Bank of Russia provided this estimate in its updated macroeconomic forecast, having downgraded it from the previous 1-2%. At the same time, the regulator maintained its forecasts on Russia’s GDP growth in 2026-2028 at 0.5-1.5%, 1.5-2.5%, and 1.5-2.5%, respectively.
The Bank of Russia also raised its forecast on the Russian oil price for tax purposes in 2025 from $55 to $58 per barrel, maintaining the forecast for 2026 at $55 per barrel. The forecast for 2027 remains at $60 per barrel. In 2028, the Central Bank also projects the average oil price for tax purposes at $60 per barrel.
The Central Bank also adjusted its forecasts on corporate lending growth in 2025, while maintaining the projections for 2026-2027. Specifically, the Central Bank adjusted its corporate lending growth forecast for 2025 to 10-13% from the previous 9-12%. The forecast on consumer lending for 2025 remained at 1-4%. The forecast on mortgage lending growth in 2025 also remained at 3-6%. Lending forecasts for 2026-2027 remained intact. The regulator still forecasts a decline in corporate lending in 2026 at the level of 7-12%, with growth to 8-13% expected in 2027. According to the Central Bank's forecasts, retail lending will increase to 5-10% in 2026, and 8-13% in 2027. Mortgage lending forecasts for 2026-2027 remained at 6-11% and 10-15%, respectively.
Projections on growth of corporate and household lending in 2028 are consistent with the regulator's expectations for 2027. According to the Central Bank, corporate and household lending growth in 2028 is expected at 8-13%, while mortgage lending growth is expected at 10-15%.