Key facts
- Sberbank's chief economist forecasts Russia's key interest rate will be cut to 13.5% by the end of the year.
- The bank increased its 2026 economic growth forecast to 0.4% from 0.3%.
- Growth drivers are identified as consumer and state demand, with fiscal spending equivalent to 2% of GDP expected.
- Ukrainian attacks on economic targets have not prevented anticipated rate cuts.
- The rouble is projected to weaken further, reaching 86-88 per dollar by year-end.
- The inflation forecast remains at 6.5% for the full year.
Sberbank's chief economist, Alexander Isakov, anticipates that Russia's central bank will continue its rate-cutting cycle, bringing the key rate down to 13.5% from the current 14% by the end of the year. This outlook persists despite ongoing Ukrainian attacks targeting Russian economic infrastructure, including oil refineries and grain export facilities.
Sberbank has also revised its economic growth forecast for 2026 upward to 0.4% from a previous estimate of 0.3%. This adjustment is attributed to a stronger-than-expected performance in the second quarter, supported by robust consumer spending and significant state demand. Isakov noted that fiscal spending is projected to contribute an amount equivalent to 2% of GDP to the economy this year.
Despite facing criticism for contributing to an economic slowdown after raising rates to combat inflation, the central bank proceeded with a 25 basis point cut in July. Isakov suggested that a further rate cut is possible in September, potentially followed by a pause before additional reductions of 25 to 50 basis points per meeting later in the year. However, he acknowledged a high degree of uncertainty surrounding these outcomes.
The rouble has weakened by approximately 15% against the dollar since May and is expected to depreciate further to a range of 86-88 per dollar by year-end. Sberbank's inflation forecast for the full year remains unchanged at 6.5%.