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Bank of Russia Cuts Key Rate to 14.5% and Tightens 2026 Guidance

Officials signaled caution due to rising inflation risks from Middle East turmoil plus potential fiscal expansion.

Overview

  • The central bank cut the key rate by 0.5 percentage point to 14.5% on Friday, matching analyst forecasts after early‑2026 data showed weak activity and a 1.8% contraction in January–February.
  • The bank narrowed its guidance for the average key rate in 2026 to 14–14.5% and now projects 8–10% in 2027, which points to a slower pace of easing than previously assumed.
  • Annual inflation stood at 5.7% as of April 20, and the bank kept its forecast for 2026 at 4.5–5.5% with a return to the 4% target in 2027.
  • Policymakers raised their 2026 oil price assumption to $65 per barrel and warned that Middle East shocks or bigger budget spending could keep rates higher for longer.
  • Following the decision, the ruble was little changed and Russian stocks slipped, as Governor Elvira Nabiullina said deeper cuts would require inflation below 4% and a rise in unemployment.