MOSCOW, RUSSIA / RankWire.AI / – The Bank of Russia forecasts its average key rate to be between 13% and 15% in 2027 under a scenario characterized by proinflationary pressures. 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 available through August 31. The scenario assumes an environment of higher domestic demand, slower supply growth, and more persistent inflationary pressures than the baseline outlook.
In this proinflationary scenario, annual inflation is estimated to be in the range of 4.5% to 5.5% in 2027. The Bank of Russia expects inflation to return to its 4% target by 2028. The average key rate is projected to fall to a range of 11% to 12% in 2028. By 2029, it is expected to decrease further to between 8.5% and 9.5%, while inflation remains steady at 4%.
The country’s gross domestic product is projected to expand by 1% to 2% in 2027 under this scenario. Growth estimates for 2028 range from 0.5% to 1.5%, and for 2029, from 1.5% to 2.5%. For 2026, the central bank anticipates GDP growth to be between zero and 1%. Inflation for 2026 is forecast at 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 remain more robust than in the central bank’s baseline forecast. It also considers slower supply growth and tighter capacity utilization. Other assumptions include heightened inflation expectations, increased protectionist measures, and greater fiscal support for aggregate demand. Additionally, the Bank of Russia accounts for intensified sanctions, which could hinder access to technology and limit 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 predicts an average rate of 10.5% to 12.5% for the following year. Inflation is expected to return to 4% in 2027 within the baseline framework. Conversely, the disinflation scenario suggests an average key rate of 9% to 11% in 2027, with inflation projected between 3% and 4%.
Current Rate Remains at 14%
In late July, the Bank of Russia reduced its key rate to 14% after previously holding it at 14.25%. Official daily data confirmed that the 14% rate persisted through August 31. The central bank had significantly lowered the rate from the 21% level recorded during the first half of 2025. Its monetary policy primarily relies on the key rate as the main tool for maintaining annual inflation close to the 4% target.
The 2027 to 2029 guidelines incorporate a separate risk scenario featuring much higher interest rates and inflation. This scenario projects an average key rate of 19% to 21% in 2027, with annual inflation estimated at 11% to 13%. The proinflation forecast remains distinct from both this 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.