At 14%, the Bank of Russia’s key rate was unchanged on Oct. 23 for a second straight meeting as officials lifted the 2026 inflation outlook despite a firmer growth forecast.
The bank put annual inflation at 6.8% as of Oct. 19 and raised its year-end 2026 estimate to 7.1% to 7.6%, from 6% to 7% in September. The revision means officials expect price increases to finish the year faster than projected in their previous forecast.
The bank’s measure of underlying inflation implied a 5% to 6% annualized pace. Officials attributed much of that reading to temporary capacity losses across several industries. The bank said household and business inflation expectations eased slightly in October but remained near the highest levels in two years.
Bank of Russia Gov. Elvira Nabiullina said returning inflation to the bank’s 4% target would require “moderately tight monetary conditions for a longer period.” The bank has also listed slow production-capacity recovery, labor-market tightness and a larger budget deficit among risks to its inflation outlook.
The bank raised its 2026 growth forecast to 0.5% to 1%, from 0% to 1% in July. It expects inflation to return to 4% in 2027. Its higher forecast for the average 2027 key rate was covered in EconoTimes’ earlier report on the rate outlook.
Reuters said all 20 analysts in its poll had forecast no change. The outlet also reported that businesses viewed cheaper borrowing as a condition for investment to restart, highlighting the tension with the bank’s stated need to maintain tight policy while price pressures remain high.
The bank said it would weigh price trends and expectations, along with domestic and external risks, in future decisions; it gave no signal on the direction of its next move. The next rate-setting meeting is scheduled for Dec. 18.
