Most factors by the March meeting suggested that the cycle of rate cuts could continue, the publication notes. First of all, the transfer of the effect of the VAT increase to prices (the base tax rate was raised from 20% to 22% on January 1) was over. Inflation in February amounted to 5.9% year-on-year against 6% a month earlier, Rosstat reported. Second, the seasonally adjusted inflation rate in February against January amounted to 0.47 vs. 1.14% a month earlier, the Central Bank estimated.
Third, the composite business climate indicator (BCI) decreased, according to the Central Bank’s monitoring. This indicator reflects how companies look at the state of the economy, whether it is growing or not. In the first half of March, the indicator’s value went into negative territory for the first time since 2022, indicating a significant slowdown. Businesses’ assessment of current inflation in March amounted to 14.4 p. against 24.1 p. a month earlier, price expectations of enterprises increased insignificantly – from 20 to 20.2 p.
This is not enough
But there were also a number of negative factors, RBC notes. Among them were uncertainty about the oil cut-off price in the budget rule, the stoppage of operations under the budget rule and the lack of information on exactly how and by how much the Ministry of Finance plans to revise budget expenditures.
In addition, inflation expectations of the population have worsened – from 13.1% in February to 13.4% in March, according to the data of the survey conducted on behalf of the Central Bank. The inflation observed by the population in March rose from 14.5% to 15.6%, which is considered the maximum since August 2025.
Russia’s central bank has signaled that monetary policy easing may continue. However, the markets have so far reacted rather restrainedly to the decision to reduce the key rate – the Mosbirzh indices remained at the level of daily fluctuations, experts say.
Analysts believe that the decision of the Central Bank on the next reduction of the key rate gives a good signal for investors and citizens. But for more confidence, other signals demonstrating the recovery of the Russian economy are also necessary, they specify.
