Nabiullina sees longer restraint as key rate stays at 14 percent
Governor Elvira Nabiullina said the Bank of Russia held its key rate at 14 percent on October 23, 2026. Persistent underlying inflation prompted a higher projected rate path, with the 2027 average now at 12.5–13.5 percent.
Inflation delays further easing
Nabiullina said underlying inflation measures had risen to 5–6 percent and were not declining.
Production disruptions affected prices directly and through expectations, requiring moderately tight monetary conditions for longer.
The Bank of Russia raised its 2026 inflation forecast to 7.1–7.6 percent and projects current price growth returning to 4 percent in the first half of 2027.
Utility tariff increases from October 1, 2026 exceeded assumptions slightly; their effect on household expectations remained limited pending new bills.
Household expectations eased in October but remained near two-year highs, while analyst and market expectations rose.
More conservative budget parameters supported easing, but capacity constraints proved more persistent than anticipated.
Credit expands despite tighter terms
The bank revised 2026 GDP growth to 0.5–1.0 percent, lending growth to 8–11 percent and money supply growth to 10–13 percent.
Investment recovered as consumption growth slowed.
Banks tightened lending terms, but higher inflation expectations offset nominal rate increases in real terms.
September retail lending reflected anticipated Family Mortgage programme changes.
Russian oil forecasts rose to $72 per barrel for 2026 and $55 for 2027.
The draft budget targets zero structural primary balance in 2029; the bank assumes fiscal policy will help disinflation.
Supply repair sets the pace
Nabiullina said inflation risks still predominate, citing slow capacity restoration, elevated expectations, labor shortages and a larger budget deficit.
Weaker domestic demand remains a disinflationary risk.
Geopolitical developments can push inflation in either direction.