Moscow:The Bank of Russia has announced its decision to keep the key interest rate unchanged at 14% per annum. This decision comes as the country faces elevated price pressures and persistently high inflation expectations.

According to Anadolu Agency – English, the central bank noted in its policy statement that the Russian economy is experiencing moderate growth in the latter half of 2026. However, underlying price growth remains elevated, with annualized terms between 5% and 6%. This trend is attributed to a temporary reduction in production capacities in certain sectors, with the bank emphasizing that aggregate demand must grow moderately for inflation to decline.

The bank's estimates showed that seasonally adjusted price growth averaged 8% in the third quarter of 2026, a significant increase from 4.8% in the previous quarter. Core inflation also rose to 6.2% from 4.5%, influenced by volatile components like motor fuel. By October, annual inflation in Russia reached 6.8%, with projections for it to finish 2026 between 7.1% and 7.6%.

In its baseline scenario, the Bank of Russia forecasts the key rate will average between 12.5% and 13.5% in 2027. The bank expects annual inflation to return to its 4% target next year. Despite this, pro-inflationary risks remain predominant, including supply-demand imbalances, prolonged production capacity contractions, geopolitical tensions, and wage growth that outpaces labor productivity. These issues persist even as labor market tightness eases and unemployment remains near historic lows.

While consumer demand growth is slowing, lending activity stayed high in the third quarter, predominantly driven by corporate borrowers. The central bank has been gradually reducing its policy rate from 21% to 14% through a series of cuts since June 2025.