The Central Bank of Russia kept its key interest rate at 14% and raised its forecast for the average rate in 2027 to 12.5–13.5%, citing persistent underlying inflation and elevated inflation expectations. Moderately tight monetary conditions will need to remain in place longer than projected in July because the inflationary effects of temporary production disruptions may prove more prolonged than expected. Underlying inflation measures have risen to 5–6% in recent months and are not yet declining. Household inflation expectations remain close to their highest levels in two years, while expectations among analysts and financial market participants have increased notably. Inflation is forecast to reach 7.1–7.6% in 2026, above the July projection. As production capacity recovers, monetary restraint is expected to bring current price growth rates back to 4% in the first half of 2027. Economic activity continues to expand moderately, with stronger domestic demand prompting an updated 2026 gross domestic product growth estimate of 0.5–1.0%. Higher nominal interest rates have been offset by rising inflation expectations, leaving monetary conditions broadly unchanged in real terms. The budget is expected to contribute to disinflation over the forecast period, but risks remain tilted toward higher inflation, including slower restoration of production capacity, persistent labor shortages, elevated inflation expectations and a larger budget deficit.
Central Bank of Russia holds key rate at 14% and raises 2027 rate forecast as inflation persists
The Central Bank of Russia maintained its key rate at 14% and lifted its forecast for the average rate in 2027 to 12.5–13.5%, indicating that monetary restraint must last longer as underlying inflation remains elevated. It projects inflation of 7.1–7.6% in 2026 and expects current price growth rates to return to 4% in the first half of 2027 as production disruptions ease.