To cut or not? Central bank faces tough choice
Hello! Welcome to your weekly guide to the Russian economy, written by Alexander Kolyandr and Alexandra Prokopenko and brought to you by The Bell. This week we get behind the dilemma facing Russia’s central bank — whether to carry on cutting rates even as inflation creeps higher.
Can the central bank cut rates with inflation rising higher?
The Bank of Russia will next Friday make its first interest-rate decision of 2026. Amid a sharp rise in inflation at the start of the year, the board of directors faces a tough call: vote for a small cut from the current rate of 16% to indicate that its easing policy is still on track, or press pause to take stock of the bubbling inflation risks. Analysts are generally leaning towards the latter. The bank had anyway given itself scope for a gradual cutting path this year, with its latest forecasts showing an average key rate of 13-15% over 2026.
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