Why did the Russian Central Bank cut its key interest rate to 14% despite rising inflation and drone attacks on critical infrastructure?

The Russian Central Bank cut its key rate by 25 basis points to 14% because it assessed that the recent surge in inflation—driven by Ukrainian drone strikes on oil refineries and Wildberries warehouses—was due to 'one-off factors' rather than sustained underlying price pressures; as stated in its official communication, 'Considerable price growth and higher inflation expectations in the summer months were mainly associated with one-off factors,' and while the bank acknowledged supply shocks and elevated household inflation expectations, it judged them insufficient at that stage to warrant holding or raising rates, especially amid a downward revision of growth forecasts to zero–1% for 2024.

What are the central bank's revised economic forecasts for 2024 growth and 2026 inflation, and what reasons did it give for these changes?

The Russian Central Bank revised its 2024 GDP growth forecast down to between zero and 1%, from a previous range of 0.5% to 1.5%, and raised its 2026 inflation forecast to 6%–7%, up from 4.5%–5.5%, explicitly citing 'the considerable rise in fuel prices' resulting from Ukrainian drone attacks on oil refineries and e-commerce infrastructure as the primary driver behind both adjustments.

Russian Central Bank Cuts Key Rate by 25 Basis Points to 14% as Ukrainian Drones Hit Economy

Jul 24, 2026

The Russian Central Bank unexpectedly cut its benchmark interest rate to 14% amid rising fuel prices caused by Ukrainian drone strikes on oil refineries. Consequently, the bank lowered its economic growth forecast to 0-1% while raising its inflation outlook to 6-7% for 2026.

reuters

2026-06-19

Russian Central Bank Trims Rate by 25 bps to 14.25% Amid Fuel Supply, Budget Risks

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Russian Central Bank Cuts Key Rate by 25 Basis Points to 14% as Ukrainian Drones Hit Economy

Russian Central Bank Cuts Key Rate by 25 Basis Points to 14% as Ukrainian Drones Hit Economy

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