In remarks to parliamentarians on its Monetary Policy Guidelines, the Central Bank of Russia reviewed its baseline outlook for a lower key rate that remains in double digits throughout 2027. The rate has fallen from 21% to 14% since June 2025, while underlying inflation is now estimated at 5%–6%. Further cuts were not considered in September or October because damage to production capacity, rising inflation expectations and a larger contribution from fiscal spending to demand warranted a pause.
Persistently elevated inflation expectations and the large share of subsidized lending explain why the policy rate remains well above underlying inflation. Subsidized credit requires tighter conditions for lending at market rates to contain overall demand. The assessment found no signs of economic overcooling, with moderate growth resuming since mid-2026 and unemployment at 2.2%. Labor shortages constrain output, making higher productivity central to expanding supply and creating room for further monetary easing as damaged facilities are restored.
The baseline assumes credit will continue growing moderately in 2027 at roughly the 2026 pace. A more favorable disinflationary scenario would allow the key rate to fall below 10% in 2027 if productivity rises faster, investment delivers higher returns and resources are allocated more efficiently. Investment in the first half of 2026 was almost a quarter higher in real terms than five years earlier, but labor productivity had improved by only 5%, underscoring the distinction between increasing investment and improving its effectiveness.