Central Bank of Russia continues to lower key rate, but drop reduced to 25 basis points

MOSCOW. June 19 (Interfax) - The Central Bank of Russia's board of directors continued to cut the key rate at its meeting on Friday, for the ninth time in a row, this time by 25 basis points to 14.25% per annum.

The last such drop was six years ago, in July 2020, when the rate was cut from 4.5% to 4.25%.

Some analysts predicted a 25 bps cut this time, but most expected 50 bps.

"Economic growth continues at a moderate pace after a temporary decline at the beginning of the year. The underlying price growth has edged down but remains generally in the range of 4%-5% in annualized terms, as estimated by the Bank of Russia. Lending growth has accelerated in recent months. Fiscal policy over the three-year horizon will be more accommodative than previously expected. This may require a higher key rate path than assumed in the April baseline scenario," the regulator said in a press release following the rate decision.

The Central Bank said it would assess the need for further key rate cuts at 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 rate was cut by 50 bps to 14.5% at the previous meeting, on April 24. It was lowered by the same 50 bps on March 20, to 15%, as well as on February 13, December 19, and October 24, 2025. Last September, the rate was cut more significantly, by 100 bps. Prior to that, on July 25, the rate was reduced as much as 200 bps, to 18% from 20%.

The Central Bank decided for the first time in more than 2.5 years to cut the rate by 100 bps, from 21%, on June 6 last year. Until then, the Central Bank had held the rate at 21% for four consecutive meetings after hiking it 200 bps from 19% on October 25, 2024.

On December 20, 2024, the Central Bank decided to keep the rate at that level, although most analysts expected an increase. The rate stage the same on February 14, March 21 and April 25, 2025.

The next rate-setting meeting takes place on July 24.