Statement by Bank of Russia Governor Elvira Nabiullina in follow-up to Board of Directors meeting on 24 April 2026

Good afternoon. Today, we have made the decision to cut the key rate to 14.5% per annum.

Economic activity is slowing down. Demand dynamics roughly correspond already to the economy’s capacity to ramp up supply. However, inflation still exceeds the target so far. Measures of underlying price growth remain in the range of 4–5%. Moreover, proinflationary risks have risen considerably. They are attributable to the Middle East conflict and possible changes in fiscal policy. In these conditions, we need to follow a more cautious and prudent approach to making our decisions. Taking this into account, we have slightly raised the forecast of the average key rate to 14–14.5% for this year and 8–10% for the next year.

I will now explain the reasons behind our today’s decision.

Firstly, inflation.

In March, current price growth did not decelerate, staying at about 6%, which was associated with one-off factors. Specifically, the Middle East conflict led to the redirection of tourist flows, which induced a rise in service prices. Another factor was growth in retail prices for petrol.

Although transitory factors significantly contribute to price dynamics, we scrutinise fundamental reasons in the first place, when analysing inflation. The key aspect is the balance between the economy’s production capacities and demand dynamics. Although the gap between the said indicators has almost closed, underlying inflation still exceeds 4% as a result of the demand overheating that was observed over previous periods. It continues to translate into inflation expectations which remain elevated. Additionally, increased budget expenditures in early 2026 also exerted upward pressure. Nevertheless, we forecast that the accumulated tightness of monetary policy will return underlying inflation to 4% as early as 2026 H2.

We have kept the inflation forecast for this year unchanged at 4.5–5.5%.

Secondly, the economy.

Economic activity decelerated in 2026 Q1, which was partly explained by the economy’s adaptation to the tax changes. Another contributor was calendar effects. The first two months of the year had three fewer business days than January–February 2025, which accounted for up to a 0.5 percentage point decrease in year-on-year GDP growth rates in 2026 Q1, according to our estimate. In 2026 Q2, this factor will have the opposite effect. May–June will have three more business days than a year earlier. All this means that we will only be able to assess output dynamics more accurately based on statistics for the first six months of 2026 as a whole.

Investment activity has generally declined, while remaining highly heterogeneous across industries and regions. Thus, mining and quarrying enterprises had moderate investment plans in early 2026 due to last year’s weak financial results. Companies may revise their investment plans upwards this year due to higher prices in global markets. Construction is also expected to rebound to a certain extent. The abnormal frosts and snowfalls at the beginning of this year led to forced downtime in 2026 Q1, and therefore, construction companies will make efforts to catch up in the next quarter. According to our forecast, total investment in 2026 will be comparable with last year’s amount.

Consumer demand growth also slowed at the beginning of the year. March saw signs of its revival, with car sales expanding notably. However, the rise in consumption is generally more moderate than in the previous year.

The labour market is recording more obvious changes. Businesses have started to reduce their recruitment and wage increase plans more actively. The percentage of enterprises reporting acute staff shortages has been declining. Some companies have begun to lay off employees. That said, the unemployment rate stays at its record lows. This means that, in the vast majority of cases, people manage to find new jobs, especially in large cities where companies still demonstrate rather high demand for labour. Overall, the labour market tightness has been decreasing gradually, and its pressure on businesses’ costs will be weakening.

The economy’s moderate dynamics in 2026 Q1 will be offset in the next periods, according to our estimates. In addition to calendar effects, this will be driven by a partial rebound in consumer and investment activity, which is already obvious from high-frequency data for March and April. Higher prices in global commodity markets should become an additional factor that will support domestic demand. Considering this, we have kept our GDP growth forecast for this year unchanged at 0.5–1.5%.

Thirdly, monetary conditions.

They have slightly eased overall since March, while remaining restrictive. Interest rates on main financial market instruments have continued to go down, adjusting to the key rate reduction.

Credit activity remains moderate from the beginning of the year. Consumer lending demonstrates signs of a rebound, while growth in the corporate segment is still modest. In 2026 Q1, part of companies’ financing needs were met not by loans, but by record-high advance payments from the federal budget. As a result, the growth rate of money supply, which combines the effects of the fiscal and credit channels, is running closer to the upper bound of the 2016–2019 range when inflation was sustainably low. If the fiscal policy’s contribution to money supply remains more significant, the dynamics of bank lending should be more moderate for the growth rate of money supply in the economy to stay at the current level.

Interest rates on time deposits have also been declining following the key rate. In these conditions, households have started using other financial instruments and demand deposit accounts more actively. Households’ saving activity remains high overall.

Now, I would like to speak of external conditions.

The situation in the Middle East remains a factor of uncertainty. According to our baseline scenario, the conflict will entail a slowdown in the world economy, a global rise in logistics and energy costs, faster inflation and higher interest rates worldwide.

We have revised upwards the forecast of the Russian oil prices to $65 per barrel for this year as well as the forecast value of exports. The value of imports will also increase due to higher global prices, albeit less notably than exports. The surplus of foreign trade will significantly exceed the level we expected in February. However, the influence of these additional export earnings on the ruble exchange rate will be largely offset by the fiscal rule mechanism. Thus, the resumption of fiscal rule-based operations will have a stabilising effect on the foreign exchange market.

I will now speak of risks.

As for the budget, its expenditures in 2026 Q1 considerably exceeded both their seasonal norm and the elevated values of 2025. In previous periods, when the dynamics of expenditures at the beginning of the year were elevated, that was usually followed by larger expenditures and a more notable budget deficit for the year as a whole. We are now expecting the updated budget parameters for this year. The general logic remains the same for us: the larger is the fiscal stimulus, the lower should be the growth rate of the second component of money supply, i.e. lending. This means that, all else being equal, the key rate should be higher.

An important risk related to external conditions is the situation in the Middle East. If the conflict drags on, the adverse effects for the Russian economy will be strengthening. The implications caused by a global rise in costs might turn out to be more serious than the benefits from larger exports and a stronger ruble.

Disinflationary risk is a more considerable cooling in domestic demand than assumed in our baseline scenario.

Winding up, I would like to comment on our future decisions.

We have currently reached the point where demand overheating has almost dissipated, while inflation has not yet returned to its low rates due to the time lags of monetary policy transmission as well as heightened inflation expectations. According to our forecast, the accumulated tightness of monetary conditions will help bring underlying inflation down to 4% in 2026 H2. Nevertheless, our further key rate decisions will largely depend on how the situation will be unfolding and to what extent the risks I mentioned will materialise.

Thank you for your attention.