Key rate held at 14.00 percent as inflation pressures rise
The Bank of Russia kept its key rate at 14.00 percent per annum and raised its projected rate path for 2027–2028. Underlying price growth accelerated in Q3 2026, prompting a call for moderately tight monetary conditions for longer.
Supply constraints lift price pressures
Most measures of underlying price growth reached 5–6 percent annualized in Q3 2026, up from 4–5 percent in H1 2026.
Discussants primarily attributed the increase to temporary output declines in certain sectors.
Higher fuel prices raised companies' costs and inflation expectations, affecting prices across goods and services.
The fuel market stabilized in October, but higher housing and utility tariffs added inflation pressure.
The economy continued to grow moderately: consumer activity growth slowed slightly, while investment activity gradually recovered.
Temporary reductions in production capacity caused domestic demand to exceed supply capacity again.
Restoring capacity was taking longer than previously anticipated, while inflation expectations remained high.
Higher rates through the forecast
The Board of Directors held the key rate at 14.00 percent per annum.
The Bank of Russia raised its projected rate path for 2027–2028, forecasting an average of 12.5–13.5 percent in 2027.
Its updated forecast puts inflation at 7.1–7.6 percent in 2026 and returning to 4 percent in 2027.
The discussion summary covers the economy, inflation, monetary and external conditions and the rate decision.
Further information appears in the Commentary on the Bank of Russia's Medium-term Forecast.
Temporary does not mean brief
The Bank of Russia sees the supply shock fading only gradually.
It says delayed capacity restoration and high inflation expectations require moderately tight monetary conditions for longer.
The unchanged rate thus accompanies a higher projected rate path for 2027–2028.
Source: Summary of the Key Rate Discussion released
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