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- The forecast is still there: the market is waiting for the retention of the key rate of 14% in October
The forecast is still there: the market is waiting for the retention of the key rate of 14% in October
The Bank of Russia will keep its key rate at 14% at its October 23 meeting, according to Izvestia's consensus forecast. The next pause in monetary policy easing is due to both the acceleration of inflation at the beginning of the month and the publication of new budget parameters. According to experts, the regulator will act cautiously: the rate is likely to start decreasing in 2027, but it will remain in double digits. What this means for citizens and the economy is in the Izvestia article.
The Central Bank's key rate meeting in October 2026
At a meeting of the board of Directors on October 23, the Central Bank will keep the key rate at 14% for the second time in a row. Seven out of eight analysts surveyed by Izvestia adhere to this forecast. Only one expert, Sergey Konygin, senior economist at Sinara Investment bank, expects a slight reduction in the rate by 25 bps, to 13.75%.
The continuation of the pause in monetary policy easing is evidenced by a faster-than-expected acceleration in inflation in early October. By the end of the year, it may exceed the Central Bank's forecast of 6-7% with a target level of 4%, said Mikhail Vasiliev, chief analyst at Sovcombank. According to him, one of the reasons remains the difficult situation in the domestic fuel market. In addition, the money supply continues to grow at a pace higher than the forecast of the Bank of Russia, that is, the volume of funds in circulation is increasing faster than expected, the expert noted.
"The tightening of labor market conditions noted in the third quarter, continuing difficulties in certain commodity markets and still high inflation expectations also speak in favor of maintaining the key rate at the current level," added Pavel Biryukov, Chief Economist at Gazprombank.
These risks were also relevant at the summer meetings, when the Central Bank nevertheless lowered the rate. However, budget documents have now become an important new factor for the regulator. In the summer, it was uncertainty about the volume of government revenues and expenditures that was one of the main reasons that held back the possible mitigation of the PREP.
At the end of September, the Ministry of Finance published updated estimates of revenues, expenditures and budget deficits for 2026, as well as a plan for 2027-2029. The forecast for revenues has been increased by 0.9 trillion rubles, to 41.2 trillion, and for expenses — by 4.4 trillion, to 48.5 trillion rubles.
Alexey Zabotkin, Deputy Chairman of the Central Bank, said that the budget parameters for the three-year period correspond to the prerequisites of the Bank of Russia's July forecast and are unlikely to affect the trajectory of the key rate. However, experts interviewed by Izvestia believe that the updated plans of the Ministry of Finance carry additional inflationary risks.
What will be the key rate in 2027
The budget momentum continues both in 2026 and for the next three years, 2027-2029. Against this background, the Central Bank will continue to act extremely cautiously. According to Izvestia's consensus forecast, by the end of the year, including the last meeting in December, the Bank of Russia will no longer lower its key rate. It will remain at 14%, although at the beginning of the year it was expected that by the end of 2026 the regulator would lower it to at least 12%.
In the coming months, pro-inflationary factors will prevail, explained Olga Belenkaya, Head of the Macroeconomic Analysis Department at Finam. According to her, annual inflation has already exceeded the upper limit of the Central Bank's forecast and already stands at 7.1%, while the population's expectations are near the annual maximum of 14.2%. Monetary policy easing is also hampered by the high growth rates of corporate lending and the broad money supply, and additional pressure on prices may be exerted by the introduction of a levy on electronics and increased recycling. In addition, the regulator is limited by the longer-than-expected recovery of production capacities of enterprises and the tense external background, which so far does not contribute to the strengthening of the ruble, even with high prices for raw materials, she added.
Experts expect a higher rate trajectory in 2027. The changes may be reflected in the forecast of the Bank of Russia, which the regulator will present at a key meeting in October: the range of the average rate is likely to be revised from 10.5–12.5% to 11-13.5%, said Natalia Pyrieva, director of the analytical department of Digital Broker. Thus, even with continued monetary policy easing, the key rate is likely to remain in the double digits.
High rates will support the attractiveness of ruble deposits, but at the same time restrain consumer lending, market mortgages and business investments, according to Alexander Bakhtin, investment strategist at Garda Capital. According to Olga Belenka, the situation in the housing market will further cool down the changes in the conditions of the family mortgage that have occurred since October 1.: Rates have become higher for families with one or two children, which limits subsidized demand in this segment.
The weakest link in the economy in 2026 is the reduction of investments in fixed assets.: according to the results of the first half of the year, they decreased by 9.9% year-on-year, and the dynamics will continue further, the expert added. Against the background of expensive loans, companies will approach new projects more cautiously, and economic growth will remain moderate: expected GDP growth is about 1.4—1.5% in the coming years, Alexander Bakhtin believes.
At the same time, tight monetary policy will continue to support the attractiveness of ruble deposits, he believes. According to the Central Bank, the average maximum interest rate on ruble deposits in the ten largest banks exceeded 13% by the end of September. Thus, even taking into account inflation, it is still very profitable to keep money on deposit — and for now this situation will continue.
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