Bank of Russia trims rate less than expected in September

Monetary policy easing cycle loses steam: At its meeting on 12 September, the Bank of Russia decided to cut the policy interest rate by 100 basis points to 17.00%, echoing July’s 200 basis point cut. Markets had priced in a larger rate reduction.

Weak economy remains Bank’s focus: The Central Bank's decision was primarily driven by a weak economy, which has suffered from prohibitively high lending rates, Western sanctions and war fatigue. Meanwhile, high inflation expectations and the ruble’s recent depreciation led the Bank to deliver a smaller interest rate cut than in previous meetings.

Bank to continue lowering rates through end-2026: The Bank of Russia has indicated that it will maintain monetary conditions as tight as necessary to bring inflation to its target by 2026. Our Consensus is for roughly 200 basis points of further rate cuts by December and for further reductions in 2026. However, following the Bank’s unexpected decision in September, some of our panelists might revise upward their projections for 2025. The Bank should reconvene on 24 October.

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