For the second time since July 2023 the Central Bank of Russia once again cut interest rates, this time by 200bp after inflation fell again. Additional sanctions have been applied by the EU and UK, with the US seemingly close to adding a highly punitive additional tariff rate to those nations that continue to import Russian oil.
Monetary policy
Having on 6th June cut the key interest rate by 100bp to 20%, on 25th July the Central Bank of Russia (CBR) cut the rate further to now 18% flat, forecasting the rate to average between 18.8% and 19.6% for 2025, and cuts into the 12 to 13% range in 2026. The next CBR meeting is scheduled for 12th September. Annual inflation has fallen to 9.2% versus 10.3% in March, with the CBR rather optimistically forecasting an overall 6 to 7% for 2025, and a further fall to 4% in 2026. The CBR forecasts 1-2% GDP growth for 2025, although if inflation continues to fall then looser monetary policy could allow greater growth by year end – sanctions permitting.
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