MOSCOW, RUSSIA / RankWire.AI / – The Bank of Russia predicts its average key rate will range from 13% to 15% in 2027 under a scenario emphasizing persistent inflation. This outlook is detailed in its Monetary Policy Guidelines for 2027 to 2029, with the central bank maintaining its current key rate at 14%, based on data up to August 31. The scenario considers stronger domestic demand, weaker supply growth, and more enduring inflationary pressures than the baseline forecast.
According to this proinflation scenario, annual inflation is forecasted to be between 4.5% and 5.5% in 2027, with the Bank of Russia expecting inflation to return to its 4% target in 2028. The projected average key rate for 2028 is 11% to 12%, subsequently decreasing to a range of 8.5% to 9.5% in 2029, while inflation remains at 4%.
Russia’s gross domestic product is anticipated to grow between 1% and 2% in 2027 under this scenario, with growth estimates for 2028 at 0.5% to 1.5% and for 2029 at 1.5% to 2.5%. For 2026, the central bank projects GDP expansion between zero and 1%, alongside annual inflation of 6% to 7% and an average key rate of 14.5% to 14.6%.
Inflation Outlook Supports Higher Rates
The proinflation scenario assumes domestic demand will remain stronger than in the central bank’s baseline projection, alongside slower supply growth and tighter production capacity. Additional assumptions include increased inflation expectations, the adoption of protectionist measures, and higher fiscal support for aggregate demand. The Bank of Russia also considers intensified sanctions pressure, which could restrict access to technology and limit productivity and overall production capacity.
The forecasted 13% to 15% average key rate for 2027 surpasses the baseline range, which predicts an average rate of 10.5% to 12.5% for next year. Meanwhile, baseline inflation is expected to return to 4% in 2027. A disinflationary scenario projects an average 2027 key rate of 9% to 11%, with inflation between 3% and 4%.
Rate Currently at 14%
The Bank of Russia lowered its key rate to 14% in late July after previously maintaining it at 14.25%. Official daily figures indicated that this 14% rate remained effective through August 31. The central bank significantly reduced the rate from the 21% level observed during the first half of 2025. Its monetary policy primarily relies on the key rate to keep annual inflation close to the 4% target.
The guidelines for 2027 to 2029 also include a separate risk scenario featuring substantially higher interest rates and inflation, projecting an average key rate of 19% to 21% in 2027 and inflation between 11% and 13%. The proinflation forecast remains distinct from both this risk scenario and the baseline outlook, forming part of the Bank of Russia’s medium-term framework for inflation, economic growth, and monetary policy.