In the Monetary Policy Guidelines, the Bank of Russia each year describes the goals of monetary policy and approaches to its implementation and provides its view of the current situation in the economy and forecasts of its development in the medium term.
In 2025, the Russian economy has continued to grow, albeit at a more moderate pace than over the previous years. Investment activity remains high, including owing to government support in priority sectors. The expansion of demand is increasingly consistent with the economy’s capacities to ramp up output. Inflation has been slowing down. This has become possible as a result of tight monetary policy.
In the future, the economy will return to a balanced and sustainable growth path and inflation will stabilise at the target.
Principles and goals
The goal of monetary policy is price stability. This is essential to ensure balanced and sustainable economic growth.
Steadily low annual inflation of close to 4%:
- Protects people’s incomes and savings against unpredictable depreciation.
- Increases the availability of financing, including through lending and issuing bonds and shares.
- Strengthens confidence in the ruble among households, businesses, and international partners.
- Enhances the economy’s resilience to changes in the external environment.
Inflation targeting:
- Helps weather crises.
- Reduces the scale of downturns or overheating in the economy.
- Is the world’s best practice, with 47 countries and associations targeting inflation and almost all of them boasting a high or medium income level among their citizens.
Monetary policy principles
- The target is annual inflation of close to 4% and is effective on a permanent basis.
- The inflation rate is calculated based on the consumer price index (CPI, Rosstat).
- After inflation stabilises at around 4%, the Bank of Russia will assess the reasonableness of decreasing the inflation target, but a reduction will only be possible no earlier than 2029.
A floating exchange rate smooths out the impact of external factors on the economy and is needed to effectively implement monetary policy.
- The Bank of Russia neither sets any targets for the level of the exchange rate or the pace of its movements nor conducts FX operations for these purposes.
- The ruble exchange rate primarily depends on importers’ demand for foreign currency and its supply by exporters. The effect of capital flows on the dynamics of the exchange rate stays less significant than before 2022. Furthermore, the difference in interest rates between Russia and other countries continues to influence residents’ and non-residents’ demand for investments in ruble assets and, as a result, the ruble exchange rate.
- The Bank of Russia can conduct operations in the FX market in order to maintain financial stability.
- Capital controls are solely a policy instrument to support financial stability in the conditions of the sanctions and the blocking of foreign currency accounts.
The key rate and communication about monetary policy decisions are the instruments enabling the Bank of Russia to form such monetary conditions in the economy that help bring inflation back to the target and keep it at this level.
- The key rate and communication influence interest rates in the economy, securities prices, and the ruble exchange rate, which in turn affect people’s and companies’ decisions on consumption, investment, and savings and, consequently, domestic demand in the economy and price dynamics.
- Monetary policy decisions begin to influence the economy immediately, but it takes three to six quarters for them to fully transmit to price dynamics.
- The Bank of Russia gives a verbal signal regarding possible future decisions on the key rate and publishes its projected path.
Monetary policy decisions impact price dynamics not instantaneously, but with a time lag. Therefore, making its monetary policy decisions, the Bank of Russia relies on a medium-term forecast of economic development.
- The Bank of Russia continuously enhances its model-based approaches.
- Decisions on monetary policy are made when there is no complete certainty.
- Preparing its forecast, the Bank of Russia conducts an in-depth analysis of a wide range of data and takes into account decisions on other state policies.
- When assessing risks of the forecast, the Bank of Russia attaches greater importance to proinflationary risks.
- The Bank of Russia seeks to promptly and amply communicate the information on the goals, principles, measures and results of its monetary policy, as well as on the assessment of the economic situation and its prospects. The Bank of Russia takes efforts to make its communication more targeted, including at the regional level.
- A better understanding of the Bank of Russia’s actions by society and confidence in monetary policy help achieve the inflation target faster.
Monetary policy pursued by the Bank of Russia in late 2024 and in 2025
Bank of Russia key rate and inflation
In 2024 H2, the economy’s deviation from a balanced growth path increased, which was fuelled predominantly by domestic demand. Overheating in demand was caused by the accumulated effect of the surge in lending and the large-scale fiscal stimulus over the previous periods. This accelerated inflation.
Seeking to reduce the gap between expanding demand and the capacities to ramp up supply and thus ensure a slowdown in inflation, the Bank of Russia was tightening its monetary policy beginning from mid-2024. At the end of October 2024, the regulator raised the key rate to 21% p.a. and maintained it at this level until June 2025.
In 2025 H1, owing to tight monetary policy, the gap between demand and companies’ production capacities started to narrow gradually, which somewhat decelerated the growth of consumption and investment. The expansion in lending slowed down notably, whereas savings continued to grow quickly. The economy recorded the first signs of a decrease in staff shortages.
Consequently, current price growth decelerated significantly. In June—July 2025, having ascertained that disinflation was stable, the Bank of Russia began to reduce the key rate. Overall, the key rate was cut by 3 pp to 18% p.a.
As long as proinflationary risks prevailed, the Bank of Russia’s signal about future key rate decisions was neutral in June—July, assuming the possibility of pauses in key rate reduction.
Forecast scenarios
The situation observed over the past five years demonstrates that the parameters of the Russian and world economies might alter extremely fast. To be able to make balanced monetary policy decisions and be ready to any developments in the economy, the Bank of Russia prepares several scenarios relying on different assumptions regarding internal and external conditions.
Internal conditions:
- Structural transformation of the Russian economy.
- Fiscal policy parameters.
- Dynamics of economic agents’ inflation expectations.
External environment:
- Deglobalisation processes and increasing protectionism in international trade.
- Global inflation processes and foreign central banks’ actions.
- Dynamics of prices for main Russian exports.
- The situation in global financial markets.
- Geopolitical conditions (new sanctions and second-round effects of enacted sanctions).
Baseline scenario
| 2024 (actual) | 2025 | 2026 | 2027 | 2028 | |
|---|---|---|---|---|---|
| Annual inflation, % | 9.5 | 4.0 | 4.0 | 4.0 | |
| Key rate, yearly average, % p.a. | 17.5 | ||||
| Gross domestic product, % YoY | 4.3 | ||||
| — % change in Q4 YoY | 4.5 | ||||
| Money supply (national definition), % YoY | 19.2 | ||||
| Banking system claims on the economy in rubles and foreign currency, % YoY, including: | 16.5 | ||||
| ● on organisations | 19.2 | ||||
| ● on households, including | 9.7 | ||||
| – housing mortgage loans | 10.4 | ||||
| Current account, $ bn | 63 | 33 | 28 | 32 | 32 |
| Financial account balance, net of reserve assets, $ bn | 57 | 53 | 42 | 34 | 35 |
| Net incurrence of liabilities | 10 | 6 | 5 | 4 | 5 |
| Net acquisition of financial assets, net of reserve assets | 67 | 58 | 47 | 38 | 40 |
| Change in reserve assets | -4 | -29 | -14 | -2 | -4 |
The baseline scenario relies on assumptions regarding economic developments in Russia and worldwide that the Bank of Russia considers to be the most probable.
Internal conditions:
- The Russian economy will continue to transform, focusing primarily on domestic demand.
- GDP growth will slow in
2025–2026. The proportion of investment in GDP will remain high. In 2027, the Russian economy will return to a balanced growth rate. - As interest rates go down, the contribution of consumer demand to GDP dynamics will increase in
2026–2027. People’s incomes will continue to grow, which will partially prop up consumer demand but will be translating largely into an increase in savings. - Fiscal policy normalisation and the return to expenditure budgeting in accordance with the long-term parameters of the fiscal rule will have a disinflationary effect over the forecast horizon.
- Given the monetary policy pursued, annual inflation will return to its 4% target in 2026 and stabilise at this level further on.
External environment:
- International trade tensions between countries will be constraining the expansion of output in the world economy and the amount of international trade. The average growth rate of the world economy in
2025–2028 will be below the2000–2019 levels. - The baseline scenario assumes a decline in global oil prices over the forecast horizon.
- The central banks of advanced economies will continue easing their monetary policies in order to support the economies as inflation decelerates.
- The US international trade policy will remain an important factor: after the sharp increase in 2025, import tariffs are supposed to be reduced gradually over the medium-term horizon.
- The existing sanctions enacted against Russia will continue to somewhat constrain the growth of exports and imports.
Disinflationary scenario
| 2024 (actual) | 2025 | 2026 | 2027 | 2028 | |
| Annual inflation, % | 9.5 | 4.0 | 4.0 | ||
| Key rate, yearly average, % p.a. | 17.5 | ||||
| Gross domestic product, % YoY | 4.3 | ||||
| — % change in Q4 YoY | 4.5 | ||||
| Money supply (national definition), % YoY | 19.2 | ||||
| Banking system claims on the economy in rubles and foreign currency, % YoY, including: | 16.5 | ||||
| ● on organisations | 19.2 | ||||
| ● on households, including | 9.7 | ||||
| — housing mortgage loans | 10.4 | ||||
| Current account, $ bn | 63 | 33 | 19 | 23 | 25 |
| Financial account balance, net of reserve assets, $ bn | 57 | 53 | 33 | 25 | 28 |
| Net incurrence of liabilities | 10 | 6 | 6 | 5 | 6 |
| Net acquisition of financial assets, net of reserve assets | 67 | 58 | 40 | 30 | 34 |
| Change in reserve assets | -4 | -29 | -14 | -2 | -4 |
Source: Bank of Russia.
The disinflationary scenario assumes a higher growth rate of potential GDP in
Internal conditions:
- This scenario assumes that companies, seeking to ramp up output amid growing staff shortages, will make larger investments, including in the private and public sectors, than predicted in the baseline scenario.
- By efficiently implementing investment projects and increasing total factor productivity, companies will be able to considerably expand the supply of goods and services. As a result, increasing supply will fully meet domestic demand in
2026–2027. The economy will be growing more quickly in2026–2027 than under the baseline scenario. - A faster rise in wages will not have a serious proinflationary effect owing to higher labour productivity.
- The assumptions regarding fiscal policy are the same as in the baseline scenario.
- Inflationary pressures will be decreasing faster and more sustainably than in the baseline scenario, which will enable the Bank of Russia to ease its monetary policy.
External environment:
- The assumptions related to the world economy and geopolitical conditions are the same as in the baseline scenario.
Proinflationary scenario
| 2024 (actual) | 2025 | 2026 | 2027 | 2028 | |
|---|---|---|---|---|---|
| Annual inflation, % | 9.5 | 4.0 | 4.0 | ||
| Key rate, yearly average, % p.a. | 17.5 | ||||
| Gross domestic product, % YoY | 4.3 | ||||
| — % change in Q4 YoY | 4.5 | ||||
| Money supply (national definition), % YoY | 19.2 | ||||
| Banking system claims on the economy in rubles and foreign currency, % YoY, including: | 16.5 | ||||
| ● on organisations | 19.2 | ||||
| ● on households, including | 9.7 | ||||
| — housing mortgage loans | 10.4 | ||||
| Current account, $ bn | 63 | 33 | 25 | 26 | 27 |
| Financial account balance, net of reserve assets, $ bn | 57 | 53 | 39 | 34 | 37 |
| Net incurrence of liabilities | 10 | 6 | 5 | 3 | 4 |
| Net acquisition of financial assets, net of reserve assets | 67 | 58 | 44 | 36 | 40 |
| Change in reserve assets | -4 | -29 | -14 | -8 | -10 |
Source: Bank of Russia.
The proinflationary scenario assumes higher domestic demand and slightly lower supply compared to the baseline scenario. The Bank of Russia will need to pursue tighter monetary policy during a longer period to bring inflation down to the target.
This scenario is more likely than the disinflationary one.
Internal conditions:
- This scenario assumes that the cooling in domestic demand and the easing of inflationary pressures will turn out to be less stable. Higher demand will be fuelled by lower supply than in the baseline scenario due to growing sanction pressure.
- The Government is supposed to expand protectionist measures, which will push up prices for imports and the demand for domestic goods, thereby increasing prices for the latter.
- Labour productivity will be growing more slowly than wages, which will intensify inflationary pressures.
- The proportion of expenditures on subsidised lending programmes is assumed to be steadily higher.
- Households’ and businesses’ inflation expectations are predicted to decrease more slowly than in the baseline scenario and become more responsive to other proinflationary factors.
- The Bank of Russia will need to pursue tighter monetary policy than under the baseline scenario to be able to bring inflation down to the target.
External environment:
- Supply dynamics will be adversely affected by increasing sanction pressure, which will constrain investment and reduce output as some technologies will become inaccessible.
- Due to tighter sanctions, Russian crude prices will be lower than in the baseline scenario.
Risk scenario
| 2024 (actual) | 2025 | 2026 | 2027 | 2028 | |
|---|---|---|---|---|---|
| Annual inflation, % | 9.5 | ||||
| Key rate, yearly average, % p.a. | 17.5 | ||||
| Gross domestic product, % YoY | 4.3 | (-3.5)—(-2.5) | (-3.0)—(-2.0) | ||
| — % change in Q4 YoY | 4.5 | (-7.0)—(-6.0) | |||
| Money supply (national definition), % YoY | 19.2 | ||||
| Banking system claims on the economy in rubles and foreign currency, % YoY, including: | 16.5 | ||||
| ● on organisations | 19.2 | ||||
| ● on households, including | 9.7 | (-4)—1 | (-2)—3 | ||
| — housing mortgage loans | 10.4 | ||||
| Current account, $ bn | 63 | 33 | 2 | 12 | 15 |
| Financial account balance, net of reserve assets, $ bn | 57 | 53 | 17 | 20 | 19 |
| Net incurrence of liabilities | 10 | 6 | -5 | 0 | 2 |
| Net acquisition of financial assets, net of reserve assets | 67 | 58 | 12 | 20 | 21 |
| Change in reserve assets | -4 | -29 | -15 | -8 | -4 |
Source: Bank of Russia.
The risk scenario assumes that the external environment will considerably deteriorate in 2026, which will negatively impact the Russian economy and accelerate inflation. This will require tighter monetary policy than in the baseline scenario.
The likelihood of this scenario is low.
Internal conditions:
- If the world economy faces a financial crisis in 2026 and sanction pressure increases, the Russian economy’s potential and its growth rates will both decline.
- GDP will be contracting during two years. A significant decline in supply will be fuelling inflation.
- Fiscal policy is assumed to prop up the economy owing to a structural primary deficit. To offset a reduction in oil and gas revenues, the economy will be extensively using the resources of the National Wealth Fund, which involves the risk of depletion of its liquid part as of the end of 2026.
- The Government will need to transform the fiscal rule with a gradual shift towards new levels of the base crude price, namely $45 and $40 per barrel in 2026 and 2027, respectively.
- To prevent inflation from spiralling out of control, the Bank of Russia will be forced to pursue tighter monetary policy in
2026–2027. This will decelerate inflation to4.0–4.5% in 2028. - In 2028, the economy will be growing at a recovery pace of
2.0–3.0% per year. The Government is expected to return to expenditure budgeting according to the fiscal rule.
External environment:
- A sharp rise in tariffs in 2026 will cause hard landing in major economies.
- Negative developments in the capital market and imbalances accumulated in advanced economies’ financial markets will entail a global financial crisis, the scale of which might be comparable with that of the
2007–2008 crisis. - Global demand will plummet amid a recession in the two largest economies (the USA and the euro area) and a considerable slowdown in China’s economic growth. Central banks will respond to the crisis by cutting their policy rates.
- Tighter sanctions will lead to an increase in the discount for Russian exports as well as a moderate decline in oil production and exports. Oil prices will notably drop in 2026 and will not bounce back to the level of the baseline scenario even by the end of the forecast horizon.
Use of monetary policy instruments
Money market rates
The operational objective of the Bank of Russia’s monetary policy is to keep overnight money market rates close to the key rate. The operational benchmark is RUONIA (Ruble Overnight Index Average). To achieve its operational objective, the Bank of Russia employs a system of instruments, specifically auctions and standing facilities to provide and absorb liquidity, as well as required reserves.
In 2025 H1, RUONIA was mostly in the lower half of the Bank of Russia interest rate corridor, close to the key rate. The average deviation of RUONIA from the Bank of Russia key rate (the spread) was -12 bp in January–July 2025 vs -24 bp in 2024.
In 2025, the banking sector will switch to a structural liquidity deficit, which will persist over the forecast horizon.
The Bank of Russia will continue to refine its system of monetary policy instruments, taking into account the situation with the banking sector liquidity and changes in the payment and financial infrastructure.
Additional materials
Boxes
1. The level of the inflation target in Russia.
2. Benefits of a floating exchange rate.
3. Model-based approaches and their evolution.
4. Interaction of monetary and fiscal policies.
5. Monetary policy and financial sector stability.
6. Inflation in Russian regions.
7. Monitoring of businesses for the purposes of monetary policy.
8. Changes in banking regulation over
9. Fiscal policy in
10. The concept of a long-term economic equilibrium and deviations of key macroeconomic variables from it.
11. Subsidised lending and its impact on the transmission mechanism.
12. Transfer curve and formation of interest rates on banking operations.
13. Companies’ interest expenses and the cost channel.
Appendices
1. Monetary policy transmission mechanism in Russia.
2. Inflation measures used by the Bank of Russia.
3. Quantitative analysis of reasons for the inflation deviation from the target and decomposition of GDP dynamics into shocks.
4. One-off supply-side inflation factors.
5. Economic agents’ inflation expectations.
6. The Bank of Russia’s communication on monetary policy issues.
7. Neutral interest rate and its estimate.
8. Financial market development.
9. Monetary programme.