The Bank of Russia left its key rate unchanged at 14% on October 23, saying current price pressures remain elevated, according to the regulator's press release.
Bank of Russia key rate, % (month end), January 2025 to October 2026, and the bank's baseline guidance for the 2027 average. Source: Bank of Russia via BIS and IntelliNews Lambda.
Economists polled by the RBC business portal had expected the second hold in a row. The regulator paused its easing cycle in September after ten consecutive cuts that brought the rate down from 21% in June 2025.
The bank now expects annual inflation to end the year at 7.1-7.6%, above the 6-7% range it had forecast until now. Annual inflation stood at 6.8% as of October 19, well above the 4% target, and the regulator estimates that underlying price growth is not slowing and is running at 5-6% on an annualised basis.
Seasonally adjusted price growth accelerated to an annualised 8% in 3Q26 from 4.8% in 2Q26, and the corresponding core measure rose to 6.2% from 4.5%. The bank blamed temporary capacity constraints in some industries and volatile items, primarily motor fuel. Its own researchers said last week that inflation topped 7% after the October increase in regulated utility tariffs, and that drone attacks had idled production and logistics capacity.
High inflation expectations are holding back disinflation, the regulator said. Household and business expectations eased slightly in October but have stayed close to two-year highs in recent months, while expectations among financial market participants and analysts have risen.
"This requires restrained growth in aggregate demand to resume a decline in underlying inflation," the bank said, adding that it will set the rate according to inflation dynamics, inflation expectations and risks from domestic and external conditions. It still sees inflation returning to the 4% target in 2027, and its baseline puts the average key rate for 2027 at 12.5-13.5%.
The economy is growing at a moderate pace in the second half of the year, according to high-frequency data. Business sentiment improved slightly in October, consumer demand growth is slowing but remains elevated, and investment activity continues to recover from the start of the year. Unemployment remains near historic lows, while wage growth is slowing and companies plan more moderate wage indexation in 2027 than in 2026. The bank said it was working from the fiscal policy parameters the government has announced, which will help slow inflation over the medium term, but warned that monetary policy may need to be adjusted if those parameters change.
Markets had largely priced in the hold. The MOEX index reversed earlier gains to trade 0.45% lower at 2,418.68 points shortly after the 13:30 Moscow time announcement, and the ruble pared its gains against the yuan, TASS reported. The next rate meeting is scheduled for December 18.