The Bank of Russia cut its benchmark interest rate by 50bps to 15.5% in its first meeting of 2026, contrasting with the median market survey of a hold, to address growth concerns in the Russian economy. The CBR cut its rate despite the reacceleration in consumer prices according to the latest data, noting that that recent price pressures were largely due to one-off events and the disinflation process will likely continue throughout the year. The central bank also noted that it did not see evidence of a substantial pass-through of the new VAT measures in large portions of the domestic consumer basket, limiting earlier concerns that higher taxes would be inflationary. Meanwhile, the CBR noted that growth slowed in the fourth quarter and that the labor market tightness is gradually decreasing. Additionally, the elevated real rates, strong ruble, and high OFZ yields in the long end maintained restrictive financial conditions and warranted lower rates.
