Russian central bank cuts key rate by 50 bps, warns of uncertainty

Moscow: The Russian central bank cut its key rate by ​50 basis points to 15% ​on Friday, as expected, citing slower inflation, but warned ​that external uncertainty had increased significantly.

"In February, price growth predictably decelerated after a temporary acceleration in January," the central bank said in a statement.

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"However, uncertainty regarding the external ‌environment has increased considerably," ⁠it ⁠added.

Russia has benefited from the Middle East crisis as prices for oil and other ​commodities it sells have risen, and the U.S. has lifted some sanctions on ​Russian oil for the first time since the start of the Ukraine conflict.

The rate cut decision makes Russia an outlier, as central bank in ​other major economies have warned of rising ⁠inflation risks due ‌to higher energy prices and global supply disruptions as ​a result ​of the war launched by the U.S. and ⁠Israel against Iran.

The central bank raised its 2026 inflation forecast ​to between 4.5% and 5.5% at a meeting in ​February but is expecting inflation to return to its target of 4% in 2027. On an annual basis, inflation slowed to 5.79% as of March 16, down from 5.84% one week before.

Before the surge in oil prices, the Russian government was working on an austerity package ‌that could include a 10% cut in non-essential budget spending. The rise in its oil revenues may put such ​plans on ​hold.

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The rouble has slid ⁠by 9% since the start of March, a move that analysts and top businessmen believed was long overdue. A weaker rouble will boost the ​state's and major companies' revenues from exports.

The rate cut will support Russia's flagging economic growth, which slowed to 1% in 2025 from 4.3% in 2024. However, leading businessmen have said that a key rate of 12% is needed for investment and growth to accelerate.