FX.co ★ Russia Cuts Interest Rate to 16%

The Bank of Russia reduced its benchmark interest rate by 50 basis points to 16% on December 19, 2025, aligning with market predictions. This decision reflects advancements in controlling inflation as the economy gradually returns to a more balanced growth trajectory. Recent statistics indicate a deceleration in both current and fundamental price increases, with seasonally adjusted inflation significantly decreasing in October and November. It is anticipated that annual inflation will dip below 6% by the end of the year. Nonetheless, inflation expectations have risen slightly, remaining a significant concern along with strong lending activities and uneven price movements influenced by volatile sectors such as fuel and food. The central bank emphasized that monetary policy will stay stringent for an extended period to ensure a sustainable return of inflation to its target level. It is projected that inflation will fall to 4–5% in 2026, with core inflation reaching 4% in the latter half of the year. The economy continues to grow at a moderate yet uneven rate, bolstered by domestic demand, while the tightness in the labor market is gradually diminishing.