Central Bank of Russia cuts key rate to 20% per annum

MOSCOW. June 6 (Interfax) - The Central Bank of Russia's board of directors has lowered the key rate for the first time in more than two and a half years, by 100 basis points from 21% per annum to 20% per annum.

The last time the rate was cut was in September 2022 - from 8% per annum to 7.5% per annum.

Most analysts expected the key rate to remain at 21%, but some experts allowed for a decrease of 100-200 basis points to 19%-20%.

"Current inflationary pressures, including underlying ones, continue to decline. While domestic demand growth is still outstripping the capabilities to expand the supply of goods and services, the Russian economy is gradually returning to a balanced growth path," the CBR said in its press release following the board meeting.

The Central Bank intends to maintain such tight monetary conditions as are necessary to return inflation to target by 2026. "This means that monetary policy will remain tight for a long period. Further decisions on the key rate will be made depending on the speed and sustainability of the decline in inflation and inflation expectations," it said.

Taking into account the ongoing monetary policy, the Central Bank expects annual inflation will return to 4% in 2026 and remain at target thereafter.

Previously, the CBR kept the rate at 21% per annum for four consecutive meetings after raising it by 200 basis points from 19% on October 25 last year. At the meeting on December 20, 2024, it was decided to keep the rate at this level, although most analysts expected an increase; on February 14, March 21 and April 25, the rate remained unchanged.

The next meeting of the CBR's board of directors on the key rate will take place on July 25.