Russia’s central bank signaled Friday that future interest rate cuts could proceed more slowly after lowering its key rate by 25 basis points to 14.25%, citing mounting inflation risks despite easing price pressures.
Bank of Russia Governor Elvira Nabiullina said stronger credit growth and a more expansionary fiscal policy outlook had significantly increased pro-inflationary risks, potentially limiting the scope for further monetary easing.
“This can limit the room for a further key rate reduction,” she said after the rate decision.
Nabiullina stressed that neither future rate cuts nor their size had been predetermined and said policymakers could pause at upcoming meetings to evaluate the effects of previous decisions before taking further action.
The Bank of Russia said lending growth had accelerated in both corporate and retail segments, while inflation expectations remained elevated despite easing somewhat.
Annual inflation stood at 5.6% as of June 15, and the central bank expects it to slow to between 4.5% and 5.5% in 2026.
Nabiullina also pointed to a recent increase in fuel prices, warning that it could affect both June inflation data and inflation expectations.
Average gasoline prices in Russia have risen about 6.6% since the start of the year, according to Rosstat data cited by local media.
The central bank said medium-term inflation risks remain tilted to the upside, citing elevated inflation expectations, wage growth outpacing productivity gains and temporary declines in motor fuel production.