Central Bank of Russia lowers key rate by 100 bps to 17% per annum

MOSCOW. Sept 12 (Interfax) - The board of directors of the Central Bank of Russia has again decided to lower the key rate, this time by 100 basis points from 18% per annum to 17% per annum.

Analysts predicted that the Central Bank would choose on Friday between lowering the key rate by 100 bps or 200 bps. At the same time, the majority of experts expected a step of 200 bps, with only some economists predicting a step of 100 bps. However, shortly before the meeting, opinions in favor of 100 bps began to be heard more frequently.

At its previous meeting, on July 25, the CBR board of directors decided to cut the key rate by 200 bps to 18% per annum from 20% per annum. Before that, on June 6, it decided to cut the rate for the first time in more than 2.5 years, by 100 bps from 21% per annum. Prior to that, the rate was last cut in September 2022 - from 8% per annum to 7.5% per annum.

"Underlying measures of current price growth have not changed significantly and generally 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 Central Bank said following its board meeting on Friday.

The CBR will keep monetary conditions as tight as necessary to return inflation to the target in 2026.

"Further decisions on the key rate will be made depending on the sustainability of the inflation slowdown and the dynamics of inflation expectations," it said.

The Central Bank kept the rate at 21% per annum for four meetings in a row until June after raising it on October 25 last year by 200 basis points from 19%. The rate was held at the meeting on December 20, 2024, although most analysts expected it to be raised. Then, on February 14, March 21 and April 25, the rate remained at the same level.

The Central Bank's board of directors holds its next rate meeting on October 24.