ISTANBUL

The Bank of Russia decided Friday to lower its key interest rate by 50 basis points to 16%, saying the Russian economy continues to return to a balanced growth path.

The decision was in line with the market expectations for this meeting.

The key rate currently stands at its 17-month low, as the decision marked the fifth consecutive rate cut.

"Underlying measures of current price growth declined in November," the central bank said in a statement, adding that the inflation expectations edged up in recent months.

The bank stated that it will maintain monetary conditions "as tight as required" to return inflation to the target.

According to the central bank's forecast, given the monetary policy stance, annual inflation will decline to 4%–5% in 2026, while underlying inflation will reach 4% in the second half of 2026.

"In 2027 and beyond, annual inflation will stay on target," it added.

Policy rate path

The Central Bank of Russia raised its policy rate to 20% immediately after the outbreak of the Russian-Ukrainian War.

The policy rate was held at 16% from the end of 2023 until the end of July 2024, with four consecutive interest rate increases in 2024.

In its June meeting, the bank lowered its policy rate for the first time since September 2022, from 21% to 20%, to 18% in July, and to 17% in September, before slashing it to 16.5% in October.

While the annual inflation in the country eased 6.6% in November, the bank aims to reduce it to 4%.