Bank of Russia Says 18% Key Rate Hinges on Faster Inflation Slowdown

A senior Bank of Russia official said the central bank could lower its 18% key interest rate later this year if inflation slows rapidly, but cautioned that such a move is not guaranteed. Andrei Gangan, who heads the monetary policy department, told government daily Rossiiskaya Gazeta that policymakers will proceed "cautiously" because inflationary risks remain elevated. Gangan outlined a baseline scenario that envisions consumer price growth of 6-7% in 2025 and a return to the 4% target in subsequent years. Under that outlook, the bank projects an average key rate of 16.3–18% between August and December 2025 and 12–13% in 2026, though the end-year level could fall outside those ranges depending on incoming data. The central bank has maintained high borrowing costs to curb price pressures. Annual inflation eased to 8.79% in July from 9.40% in June, yet household inflation expectations ticked up to 13.5% in August. Gangan said monetary decisions will continue to weigh such indicators, along with geopolitical developments, before any further adjustment to the policy rate.