Summary of the Key Rate Discussion released
The publication covers the main aspects of the discussion about the economic situation and inflation, monetary and external conditions, and alternatives to the key rate decision.
The key topics included the estimate of underlying inflation, drivers of economic and credit activity, as well as proinflationary risks stemming from the fiscal system and the fuel market.
April–May saw a decrease not only in current price growth rates, but also in many measures of underlying inflation. For some participants in the discussion, that was sufficient evidence that inflation would continue decelerating under the influence of tight monetary policy. Others, however, argued that it would be premature to draw a firm conclusion about a further decline in underlying inflation measures, as they had been affected by strong, albeit transitory, disinflationary factors in recent months.
The discussants agreed that proinflationary risks had increased, pushed up by both a stronger fiscal impulse and a temporary contraction in motor fuel production.
Monetary conditions eased, while remaining tight. Corporate and retail lending accelerated notably in April–May. The participants explained this trend differently. It could mean an upward adjustment after weak dynamics in early 2026 or signal a more sustainable rebound in demand.
Overall, in 2026 H1, the economy was growing at a moderate pace. An improvement in 2026 Q2 compensated for the economic downturn at the beginning of the year.
Following the discussion, the Bank of Russia Board of Directors cut the key rate by 25 bp to 14.25% per annum. This decision factored in both easing inflationary pressures and increased proinflationary risks. The Bank of Russia will assess the need for a further key rate cut at its upcoming meetings depending on the sustainability of disinflation, the dynamics of inflation expectations, and the analysis of the risks posed by domestic and external conditions.