By Elena Fabrichnaya and Gleb Bryanski

MOSCOW (Reuters) -The Russian central bank cut its interest rate by 50 basis points to 16.5% at a board meeting on Friday, its first since the government proposed raising VAT in 2026 and U.S. President Donald Trump imposed sanctions on Russian oil companies.

The decision was in line with economists’ median forecast in a Reuters poll.

However, the central bank also raised its 2026 inflation forecast to between 4% and 5% from 4% previously, partly due to the tax hike, and increased its average interest rate estimate for 2026 to between 13% and 15% from between 12% and 13% before.

“This is a much more negative development than the symbolic 0.5 percentage point rate cut is positive,” said economist Evgeny Kogan. The rouble rose by 0.7% against the U.S

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