The Russian central bank cut its benchmark interest rate to 14% today from 14.25% despite a spike in inflation linked to Ukrainian drone attacks on major oil refineries and e-commerce warehouses.
The rate cut was a surprise – most analysts in a Reuters poll this week had said they expected the central bank to keep its key rate on hold.
The central bank today also cut its economic growth forecast to between zero and 1%, compared to a forecast of between 0.5% and 1.5% before. It also raised the 2026 inflation forecast to between 6% and 7%, compared to between 4.5% and 5.5% previously.
“In the second quarter of 2026, the economy as a whole was growing at a moderate pace. Considerable price growth and higher inflation expectations in the summer months were mainly associated with one-off factors,” the central bank said in a statement.
Ukrainian attacks on Russian oil refineries have disrupted gasoline supply, leading to long queues at filling stations and higher fuel prices, while attacks on leading online retailer Wildberries have struck at the heart of the country’s consumer economy.
Russia’s consumer price index (CPI) rose by 0.9% in June, following a 0.2% increase in May, while annual inflation was 6%, compared to 5.3% a month earlier, according to official data.
Petrol prices are up by 16% since the start of the year.
Household inflation expectations, an important indicator which the central bank examines before making its key rate decision, rose in July to their highest level since market turmoil in March 2022, the first full month of the conflict in Ukraine.
