Ankara: The Central Bank of Russia has announced a reduction in its policy rate by 25 basis points, bringing it down to 14%. This decision aligns with market expectations and reflects the ongoing moderate growth in the country's economy, alongside recent inflationary pressures attributed to temporary factors.

According to Anadolu Agency, the Central Bank of Russia released a statement indicating the decision to lower the key rate to 14% per annum. The bank noted that the Russian economy continued to grow at a moderate pace during the second quarter, with consumer demand playing a significant role in supporting this expansion. However, the bank cautioned that consumption growth might decelerate in the latter half of the year, prompting a revision of its 2026 economic growth forecast to a range of 0-1%.

The bank emphasized that future interest rate decisions will be contingent on various factors such as inflation dynamics, inflation expectations, and risks from both domestic and international conditions. Under the current monetary policy framework, annual inflation is projected to be between 6% and 7% by the end of 2026, with a return to the bank's target anticipated in 2027.

The report also highlighted rising inflation expectations among households, businesses, and financial market participants, which could complicate efforts to achieve a consistent reduction in price growth. Although the labor market has seen a gradual easing of tightness, unemployment rates remain near historic lows. Wage growth, while slowing, continues to surpass productivity gains, according to the bank.

The central bank's current easing cycle began in June 2025, marked by an initial rate cut from 21% to 20%, the first reduction since September 2022. Subsequent adjustments have progressively lowered the rate to 16% by the end of 2025, followed by additional cuts to 15.5% in February 2026, 15% in March, 14.5% in April, and finally 14.25% in June.