A Cautious Step Down: Bank of Russia Cuts Key Rate by 100 bps to 17%

The board of directors of the Central Bank of Russia lowered the key rate by 100 basis points on Friday, September 12, 2025 — from 18% to 17% per annum. It was the third consecutive cut since June, yet a more cautious step than most analysts had expected: underlying measures of current price growth remain above the 4% target, and inflation expectations stay high.

A smaller step than the market priced in

Analysts predicted that the central bank would choose between lowering the key rate by 100 bps or 200 bps. The majority of experts expected the larger, 200 bps move, with only some economists calling a 100 bps step — although shortly before the meeting, opinions in favour of 100 bps began to be heard more frequently, Interfax reported on the day of the decision.

From a record 21% to 17%: the rate’s path

The September decision extended an easing cycle that had begun only in the summer, after more than two and a half years without a single cut. The full trajectory of the key rate since the autumn of 2024:

• October 25, 2024 — a 200 bps hike, from 19% to a record 21% per annum;
• December 20, 2024 — the board held the rate at 21% even though most analysts had expected another hike; it then remained unchanged on February 14, March 21 and April 25, 2025;
• June 6, 2025 — the first cut in more than 2.5 years: minus 100 bps from 21%, to 20%. Before that, the rate had last been lowered in September 2022, from 8% to 7.5%;
• July 25, 2025 — a 200 bps cut to 18% per annum;
• September 12, 2025 — a 100 bps cut to 17% per annum.

In total, the key rate has come down by 400 basis points from its pre-cycle level of 21%.

What the regulator said

“Underlying measures of current price growth have not changed significantly and generally remain above 4% in annualized terms. The economy continues to return to a balanced growth path. Lending growth has accelerated in recent months. Inflation expectations remain high,” the Central Bank said following its board meeting on Friday.

The regulator stressed that it will keep monetary conditions as tight as necessary to return inflation to the target in 2026. “Further decisions on the key rate will be made depending on the sustainability of the inflation slowdown and the dynamics of inflation expectations,” the statement said.

What comes next

The acceleration of lending growth noted by the board is one of the arguments for a measured pace of easing: cheaper credit risks rekindling price pressure while the inflation slowdown is not yet sustainable. The board of directors holds its next rate meeting on October 24, 2025, where it will decide whether 100 bps increments become the default step of the cycle. Further rate-decision coverage is collected on Interfax’s Rates topic page.