Under 16 — no older: market expects key rate cut in December
The market expects a 0.5 percentage point decrease in the key rate, to 16%, following the results of the last meeting of the Central Bank this year, follows from the consensus forecast of Izvestia. Inflation in Russia is gradually slowing down, and the regulator no longer needs to keep the rate at elevated levels. In 2026, it will continue to decrease gradually and may reach 13-15% by next December. What will affect the future decisions of the Central Bank is in the Izvestia article.
Will the Central Bank lower the rate at the end of the year
Following the meeting on December 19, the Bank of Russia will reduce its key rate by 0.5 percentage points, to 16%. 16 out of 17 analysts and market participants surveyed by Izvestia are confident of this. Only one expert predicts the rate to be fixed at 16.5%.
The main argument in favor of this decision is a slowdown in inflation, said Sergey Zaversky, head of the Analytical Research Department at ICSI. The rate of price growth in November and early December is noticeably lower than the Central Bank's forecast, said Rodion Latypov, chief economist at VTB Group.
— Inflation is expected in the range of 6-7% by the end of the year. At the same time, the high rate no longer has much effect on it — the Central Bank's target of 4% can only be achieved by structurally increasing supply," said Anton Sviridenko, Executive Director of the Stolypin Institute for Growth Economics.
According to him, maintaining the rate at a high level for almost three years has predictably led to a cooling of the economy and a recession in a number of industrial sectors. Continued tight credit policy would result in increased imbalances.
A strong ruble can also be an incentive to lower the key interest rate, Pavel Paevsky, head of the Credit Analysis and Macroeconomics Department at RSHB Asset Management, pointed out. Since the last meeting on November 6, the exchange rate of the Russian currency against the dollar has strengthened by 4% and reached 77.8.
This reduces the cost of importing goods to the Russian Federation, which contributes to a slowdown in overall inflation, Pavel Paevsky concluded. In addition, a strong ruble creates certain problems for exporters, which cools the economy.
On the other hand, the Central Bank sees risks in accelerating corporate lending by the end of October. In these circumstances, the regulator will seek to take a wait-and-see attitude, said Viktor Grigoriev, chief analyst at Bank Saint Petersburg. That is why we can hardly expect a step of more than 0.5 percentage points at the next meeting.
In addition, the Bank of Russia is concerned about the labor market, which remains tense, concluded Mikhail Vasiliev, chief analyst at Sovcombank. Rosstat reported that unemployment in October remained near a historic low of 2.2%, which leads to an acceleration in wage growth and increased consumer activity, which the regulator is trying to slow down.
How will the key rate change next year?
As long as economic indicators are within the forecast, there is no need for a sharp rate cut, said the Director of Macroeconomic Analysis at Dom Bank.Russian Federation" by Zhanna Smirnova.
According to the Bank of Russia's medium-term forecast for October 24, the key rate for 2026 will average 13-15 percentage points, while the average for this year was 19.2 percentage points. The inflation forecast for the end of 2026 has been raised to 4-5%, taking into account the effects of one-time inflationary factors.
— In the absence of external shocks, the key rate should gradually move down to a range that can support business activity. This is a 10-12% range. This is exactly what the Central Bank will strive for, albeit at a traditionally cautious pace," concluded Dmitry Tselishchev, Managing Director of the Rikom—Trust investment company.
Sovcombank gives a more cautious forecast — they expect the key rate to decrease only to 15.5% by the end of the first quarter of 2026 and to 14% next December. The average rate is projected at 15% after 19.2% this year.
Nevertheless, the current rate of 16.5% looks excessively high, given that the annual growth rate of the money supply on December 1, 2025 was only 12.5%, said Dmitry Golubkov, Director of Macroeconomic Analysis at OTP Bank. The last time such low values were observed was at the turn of 2021-2022, he added.
A prolonged pause in the mitigation of PREP can negatively affect the financial performance of a business — losses can amount to 3.5–3.6 trillion rubles, Natalia Milchakova, a leading analyst at Freedom Finance Global, estimated.
Nevertheless, the still high key rate will remain an important support factor for the ruble, said Viktor Grigoriev from Bank Saint Petersburg. Deposit rates are still in the range of 10-16% for periods from three to 12 months, which makes savings in the national currency attractive to investors.
The acceleration of lending, an increase in inflation expectations, and a rise in the labor market may slow down the rate of decline in the key rate. A decrease in tension in the latter segment can positively affect the rate of rate reduction.
The economy has been waiting for a long time for the Bank of Russia to switch to a key reduction cycle, and its onset at the end of 2025 was an important signal of support for business activity and consumer demand. During the year, the PREP moved from a tightening to an easing stage, and the rate dropped from 21 to 16.5% by October. This step reflects the regulator's desire for price stability: with inflation forecast at 4-5%, the Central Bank sets a baseline scenario for inflation in the range of 13-15% per annum, maintaining a moderately tight monetary policy, but creating space to stimulate the economy.
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