Economists predicted that the key rate would remain at 14%
At the October 23 meeting, the Bank of Russia is likely to keep the key rate at 14%, making a pause in the decline as a short-term trend. The main reason remains the acceleration of inflation above the target values, while lending and budget expenditures increase the risks. Denis Astafyev, an entrepreneur, fund manager and founder of the SharesPro fintech platform, and Evgeny Aslamov, CEO of the Svoi Kapital investment company, told Izvestia about this on October 16.
Why will the Central Bank keep the rate
There are still not enough reasons to return to the decline: annual inflation in September was 6.35%, and the population's expectations rose to 14.2%. For the Central Bank, it is important to see a steady decline in price pressure, supported by lower expectations, rather than one-time improvements.
"My basic scenario is to keep the key rate at 14% on October 23 and continue the September break," Astafyev explained.
According to the calculations of the Ministry of Economic Development, announced in early October, the projected annual inflation rate rose to 7.17%. The main contribution was made by the planned indexation of housing and communal services tariffs, which, according to the expectations of the Central Bank, was supposed to add about 0.7 percentage points to annual inflation, bringing it closer to the upper limit of the July forecast of the regulator at 7%.
According to Astafyev, it is assumed that the trend towards an atypical slowdown in the rise in prices of certain categories of goods in September will continue and inflation will return to the target range by the end of the year.
What increases the risks
Astafyev draws attention to lending and budget expenditures. Companies are actively borrowing even with expensive money, so demand gets additional support. If budget expenditures turn out to be higher than those included in the forecast, the regulator will have to maintain strict conditions for longer. A premature rate cut, he said, could increase pressure on prices.
At the same time, the Central Bank's rhetoric gives little reason for optimism: the regulator evaluates the growth rates of prices for various categories of goods and the impact of the situation on the fuel market.
"It is possible that the trend towards an atypical slowdown in the appreciation of certain categories of goods in September will continue, and by the end of the year, inflation will return to the target range," Aslamov admitted.
Is it possible to raise the rate and when can it decrease
An increase before the end of the year is possible, although it is not yet considered the main scenario. It may be necessary if inflation starts to accelerate steadily again, especially with a weakening ruble and additional fiscal stimulus.
"At the same time, a one—time price jump in itself does not mean the need to raise the rate: it is important how widely and for how long it will affect inflation," Astafyev said.
The Central Bank's decision has already been incorporated into exchange rates and deposit rates, so experts do not expect sharp fluctuations in the market. The decline is expected to resume in the first quarter of 2027: a December decision will require a convincing slowdown in price growth along with a decrease in expectations.
If these conditions do not work out, the pause may last after the first quarter, as the decision will depend on incoming data. Against this background, even conservative investors are actively looking towards alternative financial instruments with yields from 16-17% and above.
What does this mean for the ruble, deposits, and the forecast for 2027
Maintaining the rate will support the attractiveness of ruble savings and the ruble itself, although the exchange rate also depends on export earnings and demand for foreign currency. Deposits will remain attractive, but banks can adjust their profitability in advance based on expectations of further decisions of the Central Bank.
A quick reduction in the cost of loans is not worth waiting for: This will continue to restrain consumer demand, primarily for housing, cars and other large purchases on credit. Aslamov adds that depositors should not expect a sharp increase in profitability, and borrowers should not expect a rapid reduction in rates.
"I still consider the forecast of the average rate of 10.5-12.5% for 2027 achievable, but the lower bound looks less likely: it will require a faster reduction in inflation and the rate," Astafyev concluded.
According to him, if the price pressure turns out to be more stable than expected, the Central Bank may revise the range upward. We are talking about the average value for the year, not the rate at the end of December.
Anatoly Aksakov, head of the State Duma Committee on the Financial Market, noted on August 28 that the key rate, under favorable conditions, could decrease to 13% per annum by the end of 2026. Earlier, the MP expected a rate cut to 10% by the end of the year, but now he has recognized this scenario as unlikely.
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