The Russian Central Bank cut its key interest rate to 14 percent on Friday from 14.25 percent, despite accelerating inflation linked to Ukrainian drone attacks on major oil refineries and e-commerce warehouses.

The decision surprised markets, as most analysts polled by Reuters this week expected the central bank to keep the rate unchanged.

The central bank also cut its 2026 economic growth forecast to between 0 and 1 percent, compared with its previous estimate of 0.5 to 1.5 percent, while raising its inflation forecast to between 6 and 7 percent, up from the previous range of 4.5 to 5.5 percent.

The central bank said in a statement: 'The economy recorded moderate growth in the second quarter of 2026, and the notable rise in prices and inflation expectations during the summer months is primarily due to exceptional factors.'

Ukrainian attacks on Russian oil refineries disrupted gasoline supplies, causing long queues at gas stations and higher prices. The attacks also affected operations at Wildberries, Russia's largest e-commerce platform, negatively impacting consumer spending.

Official data showed the consumer price index rose 0.9 percent in June, after a 0.2 percent increase in May, pushing the annual inflation rate to 6 percent, compared with 5.3 percent in the previous month.

Gasoline prices have risen 16 percent since the start of the year, while household inflation expectations, which the central bank closely monitors when setting interest rates, rose to their highest level since the market turmoil in March 2022, the first full month after the outbreak of war in Ukraine.

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