Statement by Bank of Russia Governor Elvira Nabiullina in follow-up to Board of Directors meeting on 23 October 2026

Good afternoon. Today, we have made the decision to keep the key rate at 14% per annum.

The economy is growing at a moderate pace. Inflation remains elevated, and there is as yet no decline in its underlying components. To factor this in, we have updated the macroeconomic forecast and raised the key rate path. In September, we noted that the room for cutting the key rate depends on the three-year budget parameters and the effects of temporary capacity reductions on inflation and inflation expectations. The updated budget parameters have turned out to be slightly more conservative than assumed in our July forecast. Other things being equal, this would make it possible to continue lowering the key rate in line with our previous forecast. However, in terms of the second factor, we see that the effects may be more protracted. Considering this, we will need to keep monetary conditions moderately tight for a longer period to ensure a sustainable return of inflation to 4% next year.  

I will now explain the reasons behind our decision.

Firstly, inflation.

In September, current price growth rates edged down, while remaining high. They were significantly influenced by temporary disruptions at production facilities in certain industries, which affect inflation both directly and indirectly, including through the response of inflation expectations. As a result, the estimates of underlying inflation measures have risen to 5–6% over recent months and are not declining yet.

According to preliminary data, the indexation of utility tariffs from 1 October 2026 was slightly higher than assumed in our forecast. The rise in these tariffs can already be seen in the weekly price statistics, but has barely had any impact on inflation expectations of households so far, as they will receive new utility bills later this year. However, even without this impact, households’ inflation expectations, albeit having decreased in October, have been close to their two-year highs in recent months. Furthermore, the expectations of analysts and financial market participants have risen notably.

This year, inflation will be running above our July forecast to equal 7.1–7.6%. The factors behind this heightened level are transitory in nature. Companies are making a considerable effort to restore production capacity. As the situation normalises, inflation will decelerate under the influence of moderately tight monetary policy. According to our forecast, current price growth rates will return to 4% within 2027 H1.

Secondly, the economy.

In 2026 H2, economic activity has been growing at a moderate pace, with production expanding across a wide range of sectors over recent months. Companies’ estimates of future output and demand are also improving, while remaining modest.

In terms of demand, there has been a slight slowdown in consumption growth. Investment activity continues to recover, which is evidenced by an increase in the output and imports of investment goods as well as by positive trends in construction. According to the Bank of Russia’s survey, businesses expect investment to expand moderately in 2026 Q4. Considering stronger domestic demand dynamics, we have updated the estimate of GDP growth for 2026 to 0.5–1.0%.

The key trends in the labour market have not changed since the September key rate meeting. The proportion of enterprises experiencing labour shortages continues to contract, which is detailed in a dedicated box in the Regional Economy report. Nevertheless, the situation remains diverse across sectors. For example, labour is being made redundant in wood processing and ferrous metallurgy. On the other hand, non-ferrous metallurgy, chemical, and pharmaceutical companies are still demonstrating high demand for staff. Wage dynamics continue converging with labour productivity growth rates, which will facilitate the return of inflation to 4%. 

Thirdly, monetary conditions.

They remain moderately tight. Money market curves and OFZ yields have shifted upwards. In 2026 Q3, interest rates in the economy increased, while their nominal growth was offset by higher inflation expectations. This means that there has been no material change in monetary conditions in real terms.

According to bank surveys, recent months have seen non-price lending conditions tighten somewhat, primarily for large companies. That is, banks have adopted a more conservative approach to assessing borrowers’ credit risks.

Nevertheless, corporate lending growth rates remained elevated on average over 2026 Q3. A pickup in retail lending in September was associated with the anticipated change in the Family Mortgage programme terms. In light of the actual dynamics, we have slightly raised the lending forecast for 2026 to 8–11%. Furthermore, higher credit growth rates have prompted an increase in the estimate of money supply growth for 2026 to 10–13%.

The propensity to save has edged down, while remaining high. Demand for alternative saving instruments continues rising modestly.

A few words on the budget. The presented draft envisages a return to a zero structural primary balance in 2029. We proceed on the assumption that the budget will make a disinflationary contribution over the forecast period.

Now, I would like to speak of external conditions.

The world economy continues to grow. However, inflation risks are intensifying around the world, mainly due to rising fuel prices. The situation in the Middle East continues pushing up oil prices to the elevated level. Taking this into account, we have revised the forecast price for Russian oil upwards, to $72 per barrel in 2026 and to $55 per barrel in 2027. Higher crude prices will result in larger export volumes in 2026–2027 than assumed in our previous forecast.

An increase in export earnings over recent months, attributable to rising prices for crude and other commodities, bolstered the ruble. The influence of global prices on the exchange rate is limited by the fiscal rule. 

I will now speak of risks.       

Proinflationary risks still prevail and are both supply- and demand-side.

The supply-side risk is a slower restoration of production capacity. In terms of demand, there are still risks of heightened inflation expectations, protracted tightness in the labour market, and a larger budget deficit. The combination of these risks, that is, if supply contracts while demand growth accelerates, would have a more adverse effect, particularly when inflation is still high. 

A separate group of risks includes geopolitical factors, which may make either a proinflationary or a disinflationary contribution depending on how the situation unfolds.

A more considerable cooling of domestic demand, as compared to our baseline scenario, remains a disinflationary risk.

Winding up, I would like to comment on our future decisions.

Underlying inflation remains elevated, with inflation expectations in the economy staying close to their highest levels of the past years. Unfortunately, this situation might last longer than we estimated in July. Therefore, bringing inflation back to 4% will require us to maintain moderately tight monetary conditions for a longer period. Considering this, we have raised the average key rate forecast for the next year to 12.5–13.5%.

Thank you for your attention.