Russian central bank cuts key rate by 50 bps, warns of Middle East crisis uncertainty

Record ID: 2367186

  • Title: Russian central bank cuts key rate by 50 bps, warns of Middle East crisis uncertainty
  • Date: 20th March 2026
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  • Embargoed:
  • Keywords: Central bank Nabiullina Russia econoimy key rate
  • Location: MOSCOW, RUSSIA
  • City: MOSCOW, RUSSIA
  • Country: Russia
  • Topics: Europe,Budget/Taxation/Revenue,Government/Politics
  • Reuters ID: LVA007587820032026RP1
  • Aspect Ratio: 16:9
  • Story Text:The Russian central bank cut its key rate by 50 basis points to 15% on Friday (March 20) as expected, citing slower inflation, but warned that external uncertainty due to the Middle East crisis had increased significantly.
    Russia has benefited from the crisis as prices for oil and other commodities it sells have risen, and the U.S. has lifted some sanctions on Russian oil for the first time since the start of the Ukraine conflict.
    "The situation in the Middle East significantly affects the conditions on global commodity markets. The overall impact on the Russian economy will depend on the duration and scale of these geopolitical events," Elvira Nabiullina, the central bank's governor, told a news conference after the decision.
    If not for the increased uncertainty, Nabiullina said that the board could have more actively discussed a potential cut of up to 100 basis points on Friday. She said the impact of the Middle East crisis on Russia was very mixed, however.
    An increase in export revenues would help Russia to save more money in its fiscal reserve fund to create a safety cushion, she said, while warning of possible negative consequences due to lower demand for Russian exports in future.
    Asked if Russia was a beneficiary of the crisis, she said: "It is premature to draw any conclusions about the combined effects of this situation on the Russian economy."
    Nabiullina and Alexei Zabotkin, her deputy, stressed that the budget rule, a mechanism through which a share of energy revenues is saved in the reserve fund during a period of high prices, was Russia's best protection against external shocks.
    The rate cut decision makes Russia an outlier, as central banks in other major economies have warned of rising inflation risks due to higher energy prices and global supply disruptions as a result of the Middle East crisis.
    The central bank raised its 2026 inflation forecast to between 4.5% and 5.5% at a meeting in February but is expecting inflation to return to its target of 4% in 2027. On an annual basis, inflation slowed to 5.79% as of March 16, down from 5.84% one week before.
    "The Bank of Russia will assess the need for a further key rate cut at its upcoming meetings depending on the sustainability of the inflation slowdown, the dynamics of inflation expectations, and the analysis of risks posed by external and domestic conditions," the bank said.
    Before the surge in oil prices, the Russian government was working on an austerity package that could include a 10% cut in non-essential budget spending. The rise in its oil revenues may put such plans on hold.
    The rouble has slid by 8% against the U.S. dollar since the start of March, a move that analysts and top businessmen believed was long overdue. A weaker rouble will boost the state's and major companies' revenues from exports.
    The rouble strengthened by 2.7% against the dollar after mainly weakening since the end of February ahead of the central bank's announcement. Nabiullina said that exchange rate weakness did not play a role in the rate decision.
    The rate cut will support Russia's flagging economic growth, which slowed to 1% in 2025 from 4.3% in 2024. However, leading businessmen have said that a key rate of 12% is needed for investment and growth to accelerate.
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