Policy and regulationEconomy and markets
Bank of Russia holds key rate at 14% and raises next-year rate path
On 23 October the Bank of Russia kept its policy rate at 14% and revised its forecast, citing persistent price pressures and temporary capacity losses in some industries.
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The Bank of Russia held its key rate at 14% per year on 23 October and revised the projected interest-rate path for 2027. The decision reflects the central bank’s view that underlying price growth remains elevated and that some production capacity has been temporarily unavailable. Officials said those supply constraints could persist longer than assumed in the previous forecast, requiring monetary conditions to remain moderately restrictive for longer to bring inflation back toward the 4% target.
The Bank’s release said annualised, seasonally adjusted consumer-price growth averaged 8% in the third quarter, up from 4.8% in the second quarter. A comparable core measure reached 6.2%, compared with 4.5% previously. The bank estimated year-on-year inflation at 6.8% as of 19 October and forecast a full-year 2026 rate of 7.1–7.6%. It said motor fuel was among volatile items affecting prices. These are the bank’s estimates and forecasts, not final annual statistics.
The rate decision also reflects demand and capacity conditions. The bank described economic activity in the second half as growing moderately, with investment recovering and consumer activity slowing somewhat. It revised its GDP growth estimate for 2026 to 0.5–1.0%. At the same time, its surveys showed high inflation expectations and continued strong wage growth relative to labour productivity. This combination complicates the outlook: constrained supply can keep prices high, while strong demand may enable companies to pass costs through.
The forecast table gives the policy decision a longer horizon. It projects year-end inflation of 7.1–7.6% for 2026, then 4% in 2027, 2028 and 2029. Its average key-rate range is 12.5–13.5% in 2027, followed by 9–10% in 2028 and 7.5–8.5% in 2029. The same baseline expects GDP growth of 0.5–1% in 2026 and 1–2% in 2027, with gross fixed capital formation between minus 1% and zero in 2026 before a projected 1–3% expansion in 2027. These are conditional central-bank projections, not commitments or realised outcomes. The forecast also sets the tax-price assumption for Russian oil at an average $72 per barrel in 2026 and $55 in 2027, which helps explain why macroeconomic scenario assumptions matter to public investment planning.
The decision is relevant to infrastructure and construction because financing costs influence investment planning, working capital and project economics. The revised path signals restrictive conditions through 2027, while the forecast anticipates a return to target inflation. This is context for sponsors and contractors, not a project borrowing-cost forecast: actual rates depend on lender, currency, maturity, collateral and borrower risk.
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