Russian Interest rate Cut – Currency Thoughts
Russian Interest rate Cut
October 24, 2025
The Bank of Russia’s policy interest rate was unexpectedly reduced by 50 basis points to 16.5%. The rate had been cut at each of the prior three reviews by a combined 400 basis points from 21% to 17%, and hopes of an early end to the war with Ukraine, which has been Russia’s main inflationary generator, have dissipated. Russian consumer price inflation had slowed from 10.3% in March to 8.0% six months later, but that remains double the 4% target and even further from a low of 2.3% touched in April 2023. A released statement notes,
The key proinflationary risks are associated with a longer upward deviation of the Russian economy from a balanced growth path and high inflation expectations, the effects of the VAT increase, as well as with the deterioration in the terms of external trade. A further decrease in the growth rate of the global economy and oil prices in case of escalating trade disputes may have proinflationary effects through the ruble exchange rate dynamics.
Copyright 2025, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: Central Bank of Russia
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