Russian Federation Interest Rate

The Bank of Russia cut its key interest rate by 100 basis points to 20.00% on June 6, citing continued easing in inflationary pressures, including core inflation. Inflation slowed to 9.8% year-on-year as of June 2, with underlying indicators ranging from 5.5–7.5%. A drop in consumer price growth, especially for non-food items, reflected the effect of tight monetary policy and a stronger ruble. Still, inflation for food and services remains elevated, and inflation expectations—particularly among households—stay high. While the labor market remains tight, signs of easing labor shortages and wage moderation are emerging. Credit activity is subdued, and households continue to save. The Bank warned that inflation risks still outweigh disinflationary ones and highlighted the potential impact of fiscal changes or external shocks. The Bank signaled it would maintain tight monetary conditions for an extended period to bring inflation back to the 4% target by 2026.