Bank of Russia holds key rate at 14% as inflation forecast for 2026 rises to 7.1–7.6%
Russia's central bank left its key rate at 14% on 23 October, saying price pressures and inflation expectations remain high. It now expects annual inflation of 7.1–7.6% at the end of 2026, while the Finance Ministry sees this year's budget deficit swelling to 7.3 trillion roubles.
The Bank of Russia kept its key rate at 14.00% at its board meeting on 23 October, saying current price pressures remain elevated and inflation expectations stay high.
What the central bank said
According to the regulator, seasonally adjusted price growth averaged 8.0% in annualised terms in the third quarter, up from 4.8% in the second, with core inflation rising to 6.2%. Motor fuel was a key volatile component. Annual inflation stood at 6.8% as of 19 October and is now expected at 7.1–7.6% at the end of 2026. Household and business inflation expectations remain near two-year highs, the bank said. Its baseline scenario has the key rate averaging 12.5–13.5% in 2027, with inflation returning to the 4% target that year. The next rate meeting is on 18 December.
Budget strain
The decision comes as state finances deteriorate. Kommersant reported that the Finance Ministry now expects the 2026 federal budget deficit to reach 7.3 trillion roubles (3.2% of GDP), versus an original plan of 3.8 trillion, because spending is 4.5 trillion roubles higher than budgeted while oil and gas revenues are 1.3 trillion lower. Oil and gas tax revenue fell 17.2% year on year in January–September.
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