MOSCOW, RUSSIA / RankWire.AI / – Under its proinflationary forecast, the Bank of Russia expects the average key rate to be between 13% and 15% in 2027. This projection is included in the central bank’s Monetary Policy Guidelines for 2027 to 2029. As of the end of August 2026, Russia’s main interest rate was maintained at 14%. The scenario reflects increased inflationary pressures compared to those outlined in the bank’s baseline economic outlook.
The proinflationary model forecasts annual inflation of 4.5% to 5.5% in 2027. The Bank of Russia anticipates reaching its 4% inflation target by 2028 under this scenario. It predicts an average key rate of 11% to 12% for that year, which then decreases to a range of 8.5% to 9.5% in 2029, while inflation remains steady at 4%.
Economic growth is expected to stay moderate throughout the forecast period based on the same assumptions. The central bank estimates Russian GDP growth at 1% to 2% in 2027, with projections of 0.5% to 1.5% in 2028 and 1.5% to 2.5% in 2029. For 2026, the scenario indicates GDP expansion between zero and 1%, with annual inflation fluctuating between 6% and 7%.
Proinflationary scenario forecasts higher interest rate trajectory
This scenario assumes stronger domestic demand coupled with subdued supply growth compared to the baseline. It also considers slower growth in production capacity and persistent inflation expectations. The framework features increased wage growth relative to productivity, greater labor market competition, and includes elements such as heightened protectionism, increased fiscal support for demand, and intensified sanctions pressure.
These conditions lead to a projected interest rate path that surpasses the central bank’s baseline forecast. The baseline scenario anticipates an average key rate of 10.5% to 12.5% in 2027, with inflation at 4%. Conversely, the disinflation scenario estimates an average key rate of 9% to 11% for 2027, with inflation ranging from 3% to 4%.
The key rate is held steady at 14%
The Bank of Russia reduced its key rate to 14% in July 2026, continuing a series of cuts from previous levels. Official data confirmed that the 14% rate persisted through August 31. This rate remains Russia’s primary monetary policy instrument for controlling inflation and financial stability. The bank maintains a 4% annual inflation target as a guiding benchmark for its medium-term policy approach.
Additionally, the guidelines include an alternative risk scenario featuring significantly higher inflation and interest rates. In this case, the forecast projects an average key rate of 19% to 21% in 2027, with annual inflation estimated at 11% to 13%. Therefore, the 13% to 15% range applies solely to the proinflationary scenario, not the baseline or risk scenarios outlined in the Bank of Russia’s framework for 2027 to 2029.