MOSCOW, RUSSIA / RankWire.AI / – According to the Bank of Russia, its forecast for the average key rate in 2027 ranges from 13% to 15% under a scenario characterized by persistent inflationary pressures. This projection is outlined in the institution’s Monetary Policy Guidelines for 2027 to 2029. As of data through August 31, the central bank maintains its key rate at 14%. The scenario assumes increased domestic demand, weaker supply growth, and more sustained inflationary pressures than the baseline outlook suggests.
Under this proinflation scenario, the forecast for annual inflation in 2027 is set between 4.5% and 5.5%. The Bank of Russia anticipates inflation will return to its 4% target in 2028, with the inflation rate falling within the 4% range. The average key rate is expected to be between 11% and 12% in 2028, before decreasing to a projected interval of 8.5% to 9.5% in 2029, while inflation remains steady at 4%.
Under this scenario, Russia’s gross domestic product (GDP) is forecast to expand by approximately 1% to 2% in 2027. Growth estimates for 2028 range from 0.5% to 1.5%, and for 2029, from 1.5% to 2.5%. For 2026, the central bank projects GDP growth to be between zero and 1%. The annual inflation rate for that year is expected to be within 6% to 7%, with the average key rate close to 14.5% to 14.6%.
Inflation Expectations Maintain Elevated Rates
The proinflation scenario assumes domestic demand will stay stronger than predicted in the central bank’s baseline forecast, compounded by slower supply growth, tighter production capacity, and heightened inflation expectations. Additional factors considered include increased protectionist measures, higher fiscal support for aggregate demand, and intensified sanctions pressure, which could limit access to technology and hinder productivity and production capacity.
The forecast of a 13% to 15% average key rate for 2027 exceeds the baseline range, which anticipates an average rate of 10.5% to 12.5% for the following year. The baseline scenario expects inflation to return to 4% in 2027. Conversely, the disinflation scenario projects an average key rate of 9% to 11% in 2027, with inflation estimated between 3% and 4%.
The Current Key Rate Is Set at 14%
In late July, the Bank of Russia decreased its key rate from 14.25% to 14%, with official daily data confirming the rate remained at 14% through August 31. This rate reduction followed a significant cut from the 21% level recorded during the first half of 2025. The bank’s monetary policy relies primarily on the key rate as the main instrument to keep annual inflation near the 4% target.
The guidelines for 2027 to 2029 also include an alternative risk scenario characterized by considerably higher interest rates and inflation, projecting an average key rate of 19% to 21% in 2027 and annual inflation of 11% to 13%. The proinflation forecast remains distinct from both this risk scenario and the central bank’s baseline outlook, reflecting the Bank of Russia’s medium-term framework for inflation, economic growth, and monetary policy.