Russia: Bank of Russia surprises with a 25bps cut despite raising its inflation forecast

Research evidence excerpt

Russia: Bank of Russia surprises with a 25bps cut despite raising its inflation forecast

Economics Research

24 July 2026 | 5:13PM BST

Russia: Bank of Russia surprises with a 25bps cut despite raising its

inflation forecast

Bottomline: The Bank of Russia cut its key rate today by 25bps to 14.0% against our Clemens Grafe

+44(20)7774-3435 |

and consensus expectations of the Bank to remain on hold. The Bank had reduced clemens.grafe@gs.com

Goldman Sachs International

the increment of its cutting cycle from 50bps to 25bps in the last meeting citing

inflationary risk that arise from looser than anticipated fiscal policy and higher fuel

prices due to the rise in global energy prices. We had thought that the additional

impact on inflation and inflation expectations of the recent drone attacks on Russia’s

refining infrastructure and retail distribution system would keep the Bank on hold.

Household inflation expectations in July rose sharply by 230bps to 14.7% and are

the highest since the immediate aftermath of the beginning of the war. Headline

inflation increased in June by 0.7ppt mostly due to the fuel price increase.

The Bank acknowledged these additional factors in the update of its medium-term

forecasts, raising the end-year inflation forecast from 4.5-5.5% to 6-7% and

lowering its growth forecast from 0.5-1.5% to 0.0-1.0%. However, the upper bound

of the average key rate forecast for the year was only slightly raised from 14-14.5%

to 14.5-14.6%, consistent with scenarios of 25bps cuts a meeting to no further cuts

till year-end. In the press conference governor Elvira Nabiullina said that the Board

assumed that the supply restrictions due to drone strikes would prove temporary,

and though they had a meaningful impact on expectations the Bank thinks those