Summary of the Key Rate Discussion released

The key topics of discussion were the estimates of underlying inflationary pressures and economic activity dynamics.

Most participants agreed that, excluding the contribution of higher VAT, underlying inflation in 2026 Q1 remained within the range of 4–5% (seasonally adjusted annualised rate). The cooling in domestic demand and the accumulated monetary tightness will contribute to the deceleration of underlying inflation and its return to 4% in 2026 H2.

As estimated by the discussants, the slowdown in economic activity in 2026 Q1 was largely driven by transitory factors, namely a lower number of business days in 2026 vs 2025 and unfavourable weather conditions. In 2026 Q2, the calendar factor will have the opposite effect: there will be more business days in May–June than last year. It will be possible to get a more accurate picture of economic activity based on the data for 2026 H1.

The participants in the discussion pointed to inflation risks stemming from the fiscal system and external environment. High budget expenditures in early 2026 might result in a more significant fiscal impulse as of the end of the year. As regards the external environment, current growth of global prices and logistics costs is largely offset by a stronger ruble. However, if the conflict in the Middle East continues, its impact might become more proinflationary.

Following the discussion, the Bank of Russia Board of Directors decided to cut the key rate by 50 basis points to 14.50% per annum. The Bank of Russia will assess the need for a further key rate reduction at its upcoming meetings, depending on the sustainability of disinflation, the dynamics of inflation expectations, and the analysis of the risks posed by external and domestic conditions.

More details on the economic outlook are available in the Commentary on the Bank of Russia’s Medium-term Forecast.