The Bank of Russia’s Board of Directors kept its key rate at 14% per year on October 23. The central bank said the economy was growing at a moderate pace in the second half of 2026, while price pressures and inflation expectations remained elevated. It estimated underlying price growth at 5%–6% in annualised terms and said it had not yet declined.

The Bank estimated annual inflation at 6.8% as of October 19 and forecast a 7.1%–7.6% rate at the end of 2026. This is a forecast, not a final observed year-end figure. In the third quarter, current seasonally adjusted price growth averaged 8.0% at an annualised rate, compared with 4.8% in the second quarter. The corresponding core-inflation measure rose to 6.2% from a 4.5% second-quarter average.

The central bank said it would need to keep monetary conditions moderately tight for longer than it had expected in July. It forecast inflation returning to its 4% target in 2027 and raised its baseline range for the average key rate in 2027 to 12.5%–13.5%. The Bank also said 2026 inflation would exceed its July forecast.

The Bank’s assessment pointed to temporary reductions in production capacity, motor-fuel price movements and high inflation expectations. It listed supply-demand imbalances and wage growth outpacing productivity among inflation risks; a sharper-than-expected slowdown in domestic demand was identified as a disinflationary risk. These are the central bank’s explanations and risk assessment; the release does not quantify each factor’s separate contribution to prices.

The September policy discussion gives a useful comparison for the October decision. At its September 11 meeting, the Board also kept the rate at 14%, after a pause that participants considered justified while they assessed fuel-market effects, underlying inflation and fiscal-policy parameters. At that point the Bank forecast 2026 inflation at 6.0%–7.0% and 4% in 2027. The October 23 outlook raised the 2026 year-end range to 7.1%–7.6%, while keeping its 2027 return-to-target forecast. That revision shows a change in the central bank’s forecast, not a final inflation result. The September discussion had identified demand and fuel-market uncertainty, while October’s release described persistent underlying pressure and risks from supply-demand imbalance.

The policy rate is the central bank’s principal monetary-policy instrument, but its effect on inflation is not immediate. In the October release the Bank said aggregate demand remained elevated even as consumer-demand growth slowed, and that investment activity was recovering from early-2026 levels. It also linked medium-term price risks to wages growing faster than productivity, high expectations and production-capacity constraints. These are the Bank’s own diagnoses, not separate causal estimates in the release. The updated average-rate range of 12.5%–13.5% for 2027 is a baseline scenario and not a promise about each future meeting. The Bank said its next key-rate decision was scheduled for December 18, so policy could change as new inflation and activity data arrive.