MOSCOW, RUSSIA / RankWire.AI / – Under a proinflationary scenario outlined in its Bank of Russia Monetary Policy Guidelines for 2027 to 2029, the institution expects its average key rate to be within 13% to 15% in 2027. Currently, the central bank maintains its key rate at 14%, based on data through August 31. This forecast assumes heightened domestic demand, weaker supply expansion, and more persistent inflation pressures compared to the baseline outlook.
In this scenario, annual inflation is projected to range from 4.5% to 5.5% in 2027. The inflation rate is expected to return to its 4% target by 2028. The average key rate is forecasted at 11% to 12% for 2028, then declining to a projected 8.5% to 9.5% in 2029, with inflation remaining steady at 4%.
The central bank’s forecast suggests Russia’s gross domestic product will expand by between 1% and 2% in 2027 under this scenario. Growth estimates for 2028 are between 0.5% and 1.5%, and for 2029, between 1.5% and 2.5%. For 2026, the central bank expects GDP growth to be between zero and 1%, with annual inflation forecast at 6% to 7%, and the key rate at 14.5% to 14.6%.
Inflation pressures sustain higher interest rates
The proinflationary projection assumes domestic demand will stay stronger than the central bank’s baseline predictions. It also anticipates slower supply growth and tighter capacity utilization. Additional assumptions include increased inflation expectations, the implementation of protectionist measures, and higher fiscal support aimed at bolstering demand. The Bank of Russia also considers increased sanctions pressure, which could limit access to technology and hinder productivity and production potential.
The forecast of a 13% to 15% average key rate for 2027 exceeds the baseline range. In the baseline scenario, the Bank of Russia anticipates an average rate of 10.5% to 12.5% in 2027, with inflation expected to revert to 4%. A disinflation scenario projects the average key rate at 9% to 11%, with inflation between 3% and 4%.
The key rate currently remains at 14%
In late July, the Bank of Russia reduced its key rate from 14.25% to 14%, where it has stayed through August 31, according to official daily data. This significant cut followed a previous rate of 21% during the first half of 2025. The central bank relies on the key rate as the principal instrument of monetary policy to keep annual inflation close to its 4% target.
The 2027 to 2029 outlook also considers a separate risk scenario with notably higher interest rates and inflation. In this alternative case, the average key rate could reach 19% to 21% in 2027, with inflation at 11% to 13%. The proinflation forecast remains distinct from both that risk scenario and the central bank’s baseline outlook. These projections are part of the Bank of Russia’s medium-term framework for inflation, economic growth, and monetary policy.