Sberbank Sees Further Rate Cuts, Slightly Stronger Growth Despite Ukrainian Strikes

Russia's largest lender, Sberbank, expects the central bank to continue easing monetary policy, projecting the key rate will fall to 13.5% from its current 14% by the end of the year. The forecast comes despite ongoing Ukrainian strikes on Russian economic infrastructure.

The bank also slightly raised its 2026 economic growth forecast to 0.4%, up from a previous estimate of 0.3%. This revision is attributed to a stronger-than-expected second quarter and sustained demand from both consumers and the state.

"On the demand side, the drivers of growth remain the budget and the consumer duo. Their momentum is positive, but this may change," said Alexander Isakov, Sberbank's chief economist. He added that fiscal spending is expected to boost the economy by an amount equivalent to 2% of GDP this year.

Recent Ukrainian attacks have targeted oil refineries, e-commerce infrastructure, and grain export facilities. These strikes have led to petrol shortages, losses for small businesses dependent on online trade, and a halt in grain exports via the Black Sea to major customers.

Despite these disruptions, the central bank proceeded with a 25-basis-point rate cut in July. Isakov outlined a potential path forward: "The basic scenario is that a rate cut in September is possible, followed by one pause before the end of the year, and then rate cuts at a pace of 25 to 50 basis points per meeting with pauses."

The central bank's next rate-setting meeting is scheduled for September 11, with subsequent meetings in October and December. Isakov noted that a "high degree of uncertainty" still surrounds these outcomes.

On the currency front, the rouble, which has weakened 15% to about 80 per dollar since May, is expected to depreciate further to between 86 and 88 per dollar by year-end. The full-year inflation forecast remains unchanged at 6.5%.