The Central Bank of Russia published an account of the discussion behind its decision to keep the key rate at 14.00% per annum and raise its projected rate path for 2027–2028. Production capacity is recovering more slowly than expected, while inflation expectations remain high, requiring moderately tight monetary conditions for longer to return inflation sustainably to the 4% target. Most measures of underlying price growth reached annualized rates of 5–6% in the third quarter of 2026, compared with 4–5% in the first half, primarily reflecting temporary output declines in certain sectors. Reduced production capacity caused domestic demand to exceed supply capacity again despite moderate economic growth. Higher fuel prices increased business costs and inflation expectations, affecting prices across goods and services. Although the fuel market stabilized in October, higher housing and utility tariffs added to inflation. The updated forecast puts the average key rate at 12.5–13.5% per annum in 2027. Inflation is projected at 7.1–7.6% in 2026 before returning to 4% in 2027.
Central Bank of Russia details inflation pressures behind 14.00% key rate hold and higher rate projections
The Central Bank of Russia’s account of its policy discussion links the 14.00% key rate hold and higher rate projections to supply constraints and rising underlying inflation. Most underlying price measures increased at annualized rates of 5–6% in the third quarter of 2026, up from 4–5% in the first half. The updated forecast puts the average key rate at 12.5–13.5% in 2027, with inflation returning to 4% that year.