News FlashFundingLast updated: 6 June 2025

Bank of Russia Cuts Key Rate by 100 Basis Points to 20% Per Annum

On June 6, 2025 the Board of Directors of the Bank of Russia cut the key rate by 100 basis points, from 21% to 20% per annum. The step ended a pause of more than two and a half years: for the first time since September 2022 the regulator eased monetary policy, and the decision itself turned out to be a surprise for the majority of analysts, who had expected the rate to remain at 21%.

The first cut in more than two and a half years

The previous reduction of the key rate dates back to September 2022, when it was lowered from 8% to 7.5% per annum. After that the regulator kept the rate unchanged for a long period and later moved it upward, so that by the summer of 2025 it stood at 21%. The decision of June 6, 2025 therefore opened a new phase of the monetary policy cycle: minus 100 basis points in a single step, to 20% per annum.

The parameters of the decision

• date of the decision — June 6, 2025;
• the step — minus 100 basis points: from 21% to 20% per annum;
• the previous cut — September 2022, from 8% to 7.5% per annum;
• the interval between the two cuts — more than two and a half years.

Analysts expected a hold

The June meeting did not match the consensus forecast. The majority of analysts polled ahead of the decision expected the key rate to remain at 21% per annum. Only some experts allowed an easing, and their estimates of a possible step ranged from 100 to 200 basis points, that is, a reduction to 19-20% per annum.

1. the base scenario of the majority — the rate stays at 21%;
2. the minority scenario — a cut of 100 basis points, to 20%;
3. the most decisive of the admitted scenarios — a cut of 200 basis points, to 19%.

The realized outcome coincided with the lower bound of the easing range: the regulator chose a step of 100 basis points. Thus the decision of June 6, 2025 became a surprise both for the supporters of a hold and for those who had priced in a deeper reduction. The outcome of the meeting was reported by Interfax.

The regulator's comment

In the statement accompanying the decision, the Bank of Russia explained why the moment for the first cut in more than two and a half years had come. The argumentation rests on two assessments: the dynamics of inflationary pressure and the trajectory of the economy.

Inflationary pressure is declining

"Current inflationary pressure, including its persistent component, continues to decline," the regulator noted. It is precisely the weakening of pressure, including its persistent part, that became one of the grounds for the step. The second pillar of the comment is the assessment of output: "the Russian economy is gradually returning to a trajectory of balanced growth."

Tight policy until inflation returns to the target

At the same time the Bank of Russia stressed that the reduction of the rate does not mean an abandonment of tight conditions. The regulator intends to maintain the tightness of monetary policy required to return inflation to the target of 4% in 2026. Further decisions on the key rate will depend on the speed of the decline of inflation and on inflation expectations.

What the decision of June 6, 2025 means

The cut to 20% per annum fixed the starting point of a possible easing cycle, yet the regulator's comment limits the room for expectations: policy remains tight for as long as it is needed to return inflation to 4% in 2026. The combination of an unexpected step and a cautious formulation about the dependence of further decisions on the dynamics of inflation and inflation expectations sets the frame in which the market will read the subsequent signals of the Bank of Russia.