Attention! New Key Rate from Russia's Central Bank Revealed. What's Next?

Reasons for Policy Softening

The economy is returning to balanced development, although prices accelerated in January due to one-off factors like increases in VAT, excises, and tariffs on fruits and vegetables. Persistent inflation indicators remain stable in the 4–5% range, with the annual estimate as of February 9 at 6.3%. After the temporary effects fade, price declines will resume: the 2026 forecast is 4.5–5.5%, targeting 4% in the second half of the year and beyond.

The regulator will continue monitoring inflation slowdown and business expectations. Baseline scenario: average rate of 13.5–14.5% in 2026 under tight monetary conditions.

Price and Economic Dynamics

In Q4 2025, current inflation (seasonally adjusted) slowed to 3.9% (annual) from 6.5% in Q3. Core — 4.7% vs. 4.1% previously. 2025 outcome — 5.6%, below October forecast thanks to low vegetable prices and no VAT pass-through. Redistribution of inflation to early 2026 doesn't change the overall picture: accumulated growth since November matches expectations.

GDP growth for 2025 — 1.0% (upper forecast boundary), with acceleration at year-end due to consumer demand ahead of tax hikes. In coming months, demand will cool, labor market tensions will ease: workforce shortage is minimal since mid-2023, wage indexation is more moderate.

Risks and Forecast

Pro-inflationary factors prevail: economic overheating, expectations, VAT, foreign trade, and geopolitics. Disinflation is possible with demand slowdown. Lending has slowed, household savings are high, loan and deposit rates have fallen but remain tight.

The Central Bank assumes current fiscal policy aiding price reduction. Updated medium-term forecast is available on the regulator's website. Meeting summary will be released February 26, next meeting — March 20 at 13:30 Moscow time.