The Central Bank reduced the rate to 16% per annum

The Central Bank, as expected, reduced the rate from 16.5% per annum to 16%, the regulator said in a statement.

This happened against the backdrop of a slowdown in price growth: by December 15, annual inflation fell to 5.78%, if calculated using the Central Bank’s methodology based on weekly dynamics, or to 6.08%, if determined using the Ministry of Economic Development’s methodology based on average daily data.

Vladimir Putin, speaking today at the annual press conference, estimated the price increase for the year at 5.7-5.8%.

The Central Bank expects inflation to reach its target of 4% in 2026.

Why did the Central Bank lower the rate? The main thing from the press release

Today, the Central Bank lowered the key rate for the fifth time in a row - this time to 16%. The press release, as analysts note , was without surprises, but there was still something in it.

• The Central Bank pointed to a slowdown in inflation; by the end of the year it is expected to be below 6%. At the same time, the population's inflation expectations remain elevated. They were inflated by expectations of growth in VAT, recycling collection and housing and communal services tariffs, noted economist Dmitry Polevoy.
• Tension in the labor market is decreasing; against this background, companies are planning more moderate wage indexations in 2026 compared to 2023–2025. But wage growth continues to outpace labor productivity growth.
• Proinflationary risks continue to prevail over disinflationary ones over the medium term. The main risks: a longer overheating of the economy, high inflation expectations and a deterioration in the situation with foreign trade.
• Separately, the Central Bank points out the risk of a fall in world oil prices, which could lead to an increase in prices through a weakening of the ruble exchange rate. We talked in more detail about how Russia will live with low oil prices here .
• ◽️The Central Bank’s signal overall remained neutral, but still suggests a sustainable continuation of the rate reduction trajectory, notes economist Yegor Susin. Another opinion: a pause in the rate reduction is possible in February-March while the economy “digests” the VAT increase, says economist Anton Tabakh.