Financial backers anticipate the Bank of Russia to reduce the primary interest rate to 18% during July 25th
The Bank of Russia has announced a significant move, lowering the key interest rate by 2 percentage points (200 basis points) on July 25, 2025, as the economy shows signs of slowing down [1][2][3][4]. This decision, consistent with forecasts and market expectations, was driven by faster-than-expected declines in inflationary pressures and slowing domestic demand growth.
The central bank stated that inflation and core inflation are decreasing faster than previously forecast, with annual inflation falling to 9.2% as of July 21, 2025, down from higher levels earlier in the year [1]. The Bank of Russia also expects inflation to continue decreasing to 6-7% in 2025 and return to the target rate of 4% in 2026 [1][4].
This move comes amidst predictions from analysts that the rate cut trend will continue [5]. Alexei Zabotkin, deputy chair of the CB, has even suggested that the key rate could be cut by more than 1 percentage point if inflation approaches its target (4%) [6].
The most important factor for the Bank of Russia's decision is the inflation forecast, which is expected to be revised down to 6.0-7.0% from the current 7.0-8.0% [7]. The process of banks lowering deposit rates is happening faster than the trajectory of the key interest rate [8]. Banks are aggressively lowering their deposit rates in anticipation of further decreases in the key interest rate.
The Bank of Russia indicated that monetary policy will remain tight over the medium term to ensure inflation returns to the target, with further rate decisions dependent on inflation dynamics and inflation expectations [1][4]. The average maximum offer from banks in the first week of July 2025 reached 17.91% annually, the lowest figure in the past ten months, reflecting this trend [9]. The average maximum rate has decreased by 4.37 percentage points in six months, while the central bank's key rate has only dropped by 1 percentage point.
The Bank of Russia's statements indicate that they are increasingly confident that a strong ruble is due to their high key rate [10]. This decision, however, should be considered in the context of inflation projections, as currency forecasts are crucial for these projections [2].
For those interested in updates on this and other economic developments, Zen.Zen, Newsletter, Email, Telegram, VKontakte are available for follow-up [11]. The Bank of Russia will announce the key interest rate on Friday, July 25th. Economic growth forecasts suggest it will almost halt in the second half of the year.
[1] DK.RU [2] Konstantin Selianin's Predictions [3] Lending Growth Forecasts [4] Bank of Russia's Forecasts [5] Analysts' Predictions [6] Alexei Zabotkin's Predictions [7] Inflation Forecast Revision [8] Banks' Deposit Rate Adjustments [9] Maximum Offer Rates [10] Bank of Russia's Confidence in Strong Ruble [11] Follow-up Options for Updates
The Bank of Russia's decision to lower the key interest rate by 2 percentage points is influenced by the declining inflation rate and slowing domestic demand growth, which are significant factors in the finance and business sectors. With annual inflation falling to 9.2% as of July 21, 2025, and expectations for it to continue decreasing, analysts predict a continuance of the rate cut trend.
