Bank of Russia Cuts Key Rate to 16% in Fifth Straight Reduction

The Bank of Russia (Банк России) cut its key rate by 0.5 percentage points to 16% at its board meeting on December 19, 2025 — the fifth consecutive reduction and the last rate decision of the year. The easing cycle began in June 2025, when the rate stood at a record 21%. The next meeting on the key rate is scheduled for February 13, 2026, and the regulator will publish a summary of the December discussion on December 29, 2025.

A return to balanced growth

According to the central bank's release, the economy continues to return to a "balanced growth trajectory". Sustainable price-growth indicators declined in November, and labour market tensions are easing. At the same time, credit activity remains high, while inflation expectations have risen in recent months — a dynamic the regulator says could hinder a sustainable slowdown in inflation.

Inflation below the forecast floor

Annual inflation was estimated at 5.8% as of December 15, 2025, and is expected to end the year below 6% — lower than the 6.5% floor of the central bank's October forecast. The regulator expects the slowdown in price growth to continue once the effects of the value-added tax increase and the indexation of regulated prices and tariffs are exhausted. For upcoming meetings the central bank gave a neutral signal: decisions will be taken "depending on the sustainability of the inflation slowdown and the dynamics of inflation expectations".

Over the medium term, the bank sees pro-inflationary risks as prevailing. Its release lists:

• a more prolonged deviation of the Russian economy from the balanced growth trajectory;
• high inflation expectations;
• effects of the VAT increase and of regulated price and tariff indexation;
• geopolitics and conditions on global markets;
• a possible deterioration in foreign trade conditions.

What economists expected

Economists surveyed by Forbes did not doubt that the central bank would cut again; the main intrigue was the size of the step. Most expected a 0.5-point reduction, while some allowed for a weightier one-point move. Advocates of the moderate step pointed to one-off pro-inflationary factors — in particular the VAT increase from the start of 2026 and its consequences for inflation and for the price expectations of households and businesses. The story was reported by Georgy Peremyotin (Георгий Перемитин) for Forbes Russia. The rate trajectory shapes lending conditions across Russia, where monetary policy remains the key anchor for consumer and corporate borrowing costs.