Bank of Russia decision in September?
A September cut is possible, but a hold still looks slightly more likely. I estimate a 42% chance that the Bank of Russia lowers the key rate after the September meeting.
Analysis
The starting point is a policy rate that is still clearly restrictive at 14.00%, and the Bank of Russia already showed in July that it is willing to resume easing after a long period of tight policy. That July cut matters because it signals the central bank is no longer in a pure wait-and-see posture, and if inflation and demand data continue to cool, another small step down in September would be consistent with that path. The fact that deposit rates and lending rates remain elevated also suggests policy transmission is still tight, so there is room for a modest cut without immediately removing restraint.
Arguments for Yes are strengthened by the broader disinflation narrative and by the view that the current rate is far above the central bank’s own estimate of neutral policy. A 25 bp reduction would still leave the stance highly restrictive, so the Bank does not need to choose between easing and fighting inflation in an all-or-nothing way. If upcoming data show inflation stabilizing, credit conditions softening, and no major ruble or external shock, the September meeting becomes a natural candidate for a cautious follow-up cut after July.
Arguments against Yes are still substantial because the Bank of Russia has been careful about preserving credibility and may prefer to pause after one cut, especially if it sees any renewed inflation pressure or wants more evidence that July was not a one-off. The latest official forecast and the mixed analyst commentary suggest the committee is not locked into a cutting cycle, and market pricing itself leans modestly toward no change. In practice, this makes September a close call, but not one where a cut is clearly more likely than a hold. The most reasonable read is that easing is underway, yet the next move depends on whether incoming inflation and activity data give policymakers enough confidence to continue immediately.
Arguments
For
- Arguments for Yes: The Bank of Russia has already restarted easing, so a second 25 bp cut would fit a gradual normalization path.
- Arguments for Yes: Policy is still very restrictive relative to the neutral-rate estimate, giving policymakers room to reduce rates without losing tightness.
Against
- Arguments against Yes: The central bank may prefer to pause after July to confirm that disinflation is durable before easing again.
- Arguments against Yes: Current market pricing and several analyst assessments still lean toward no change, showing that a September cut is not the base case.
Key drivers
- The Bank of Russia already cut rates in July, which raises the odds that September could be another small easing step.
- The policy rate remains far above the central bank’s neutral estimate, leaving room for further cuts if inflation keeps improving.
- Market pricing and some analyst views favor a hold, indicating the decision is not yet decisively tilted toward another cut.
Risk factors
- Any reacceleration in inflation or inflation expectations could push the Bank to pause in September.
- If the central bank wants to validate the July cut with more data, it may choose to wait rather than cut again quickly.
Scenarios
Best case
Inflation data continue to soften, credit conditions remain tight, and the Bank of Russia uses September to deliver another 25 bp cut to 13.75% as part of a measured easing cycle.
Most likely
The Bank of Russia stays cautious, but with disinflation continuing it remains close to a cut-versus-hold decision, making a small reduction possible though still less likely than a pause.
Worst case
Inflation or expectations worsen enough that the central bank holds at 14.00% and signals a longer pause before any further easing.
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