MOSCOW, RUSSIA / RankWire.AI / – The Bank of Russia forecasts its average key rate to be between 13% and 15% in 2027 under a scenario that favors persistent inflation. This projection is included in its Monetary Policy Guidelines for 2027 to 2029. Currently, the central bank maintains its key rate at 14%, based on data through August 31. The scenario assumes heightened domestic demand, slower supply expansion, and more enduring inflationary pressures than the baseline forecast.
Under this proinflation scenario, annual inflation is expected to reach 4.5% to 5.5% in 2027. The Bank of Russia anticipates inflation will return to its 4% target in 2028. The average key rate is projected to be between 11% and 12% in 2028, then decrease to a range of 8.5% to 9.5% in 2029, with inflation remaining at 4%.
Russia’s gross domestic product is expected to grow by 1% to 2% in 2027 under this scenario. Growth estimates are at 0.5% to 1.5% for 2028 and 1.5% to 2.5% for 2029. For 2026, the central bank predicts GDP growth will be between zero and 1%. The projected inflation rate for 2026 is 6% to 7%, with the average key rate at 14.5% to 14.6%.
Inflation Outlook Maintains Elevated Rates
The proinflation scenario assumes domestic demand will stay stronger than in the central bank’s baseline outlook. It also considers slower supply growth and tighter production capacity. Additional assumptions include heightened inflation expectations, increased protectionist measures, and higher fiscal support for aggregate demand. Furthermore, the Bank of Russia accounts for increased sanctions pressure, which could limit access to technology and restrict productivity and production potential.
The forecast of a 13% to 15% average key rate for 2027 exceeds the baseline range. Under the baseline scenario, the Bank of Russia estimates an average rate of 10.5% to 12.5% in the upcoming year. It expects inflation to return to 4% in 2027. The disinflationary scenario projects an average key rate of 9% to 11% in 2027, with inflation between 3% and 4%.
Key Rate Stays at 14% Currently
The Bank of Russia lowered its key rate to 14% in late July, after previously holding it at 14.25%. Official daily data indicated that the 14% rate remained in effect through August 31. The central bank had significantly reduced the rate from the 21% level observed during the first half of 2025. Its monetary policy primarily relies on the key rate as the main tool for keeping annual inflation close to the 4% target.
The 2027 to 2029 policy guidelines also feature an alternative risk scenario with notably higher interest rates and inflation. In that case, the average key rate is projected at 19% to 21% in 2027, with annual inflation forecasted at 11% to 13%. The proinflation forecast remains separate from both the risk scenario and the central bank’s baseline outlook. These projections form part of the Bank of Russia’s medium-term framework for inflation, economic growth, and monetary policy.