MOSCOW, April 24. /TASS/. The Bank of Russia has cut its key rate by 50 basis points (bp) to 14.5% per annum, as analysts unanimously predicted in the consensus forecast compiled by TASS. Domestic demand dynamics have approached the capacity for supply expansion, while sustainable price growth indicators are not yet declining, the regulator stated in a press release following its board of directors meeting.
"On April 24, 2026, the Bank of Russia Board of Directors decided to cut the key rate by 50 basis points to 14.50% per annum. Domestic demand dynamics have roughly corresponded to the economy’s capacity to ramp up supply of goods and services. However, measures of underlying price growth have not yet decreased and remain in the range of 4-5% in annualized terms, as estimated by the Bank of Russia. There is still significant uncertainty regarding the external environment and fiscal policy parameters," the Central Bank said.
The regulator noted that it would assess the need for further key rate cuts at its upcoming meetings depending on the sustainability of the inflation slowdown, the dynamics of inflation expectations, and the analysis of risks posed by external and domestic conditions.
The baseline scenario assumes an average key rate in the range of 14-14.5% per annum in 2026 and 8-10% per annum in 2027. "According to the Bank of Russia’s forecast, given the monetary policy stance, annual inflation will decline to 4.5-5.5% in 2026. Underlying inflation will be close to 4% in 2026 H2. In 2027 and beyond, annual inflation will stay on target," the regulator said.
Annual inflation stood at 5.7% as of April 20. Inflation expectations have changed diversely since March. "Households’ inflation expectations declined. Businesses’ price expectations barely changed. Financial market participants’ expectations edged up. In general, expectations for future inflation remain elevated. This may impede a sustainable slowdown in inflation," the Central Bank stressed.
According to high-frequency data, the Russian economy slowed in Q1 2026, in part due to the adjustment to the earlier tax changes, the regulator added. "The other contributors were a fewer number of business days and unfavorable weather conditions. Investment activity remains subdued. Consumer demand growth continues to decelerate, despite a slight pick-up in March. Taking into account that economic activity dynamics in 2026 Q1 were largely driven by one-off factors, the Bank of Russia has retained its GDP growth forecast for 2026 at 0.5-1.5%," according to the press release.
Labor market tightness gradually easing
The labor market tightness in Russia is gradually decreasing, with unemployment remaining at historical lows, the regulator said. "According to surveys, the percentage of enterprises experiencing labor shortages continues to shrink and is now at its lowest level since mid-2023. Companies are planning more moderate wage indexations in 2026 compared to 2023-2025. Meanwhile, unemployment remains at historical lows, and wage growth is still outpacing growth in labor productivity," according to the Bank of Russia.
That said, monetary conditions have eased somewhat but remain tight. Interest rates have declined in most segments of the financial market. Non-price bank lending conditions are still tight.
Lending activity is moderate. Among other things, this is due to the record-high advance funding of government spending in Q1 2026. Households generally continue to demonstrate a high propensity to save.
"Proinflationary risks still prevail over disinflationary ones on the mid-term horizon. The key proinflationary risks are associated with a deterioration in the global economic outlook and rising global price pressures amid increased geopolitical tensions, as well as with high inflation expectations and a long period of wage growth outpacing growth in productivity. Disinflationary risks involve a more significant slowdown in domestic demand," the Central Bank concluded.
Updated macroeconomic forecast
In its updated macroeconomic forecast, the Bank of Russia also narrowed the forecast corridor for the average key rate through the end of 2026 from 13.5-14.5% to 14-14.5%. Moreover, according to the regulator, the average key rate under the new forecast for 2027 will be 8-10% instead of the previously projected 8-9%. The forecast for 2028 was maintained at 7.5-8.5%.
At the same time, the Bank of Russia sharply raised its oil price forecast for tax purposes in 2026, from $45 to $65 per barrel. The regulator also raised the price forecast from $50 to $55 per barrel for 2027, and maintained it at $55 for 2028.
The Bank of Russia also revised its forecast for corporate lending growth by the end of 2026 from 7-12% to 7-11%, and narrowed its mortgage lending growth corridor from 6-11% to 6-10%. It also changed the upper bound of its retail lending growth forecast from 5-10% to 5-9%.