Business · Economy · 10 hrs ago
Russia’s central bank says room for rate cuts has narrowed
Bank of Russia Governor Elvira Nabiullina said there is still room to cut interest rates next year, but that room has narrowed.
The bank’s board discussed the key rate at its meeting, and Nabiullina said decisions are not based mechanically on one or more models.
The bank expects inflation to return to 4% in the first half of 2027.
It says keeping monetary conditions moderately tight for longer will be needed to bring inflation down sustainably.
High household inflation expectations are a key concern, with expectations near their highest levels in two years.
A persistently large budget deficit could also push the neutral interest rate higher, the bank said.
Russia’s economy is expected to recover lost capacity gradually, though the bank said the timing is difficult to forecast and expects recovery in 2027.
Bank of Russia Governor Elvira Nabiullina said there is still room to cut the key rate next year, but that room has narrowed.
She said a persistently high budget deficit would raise the neutral key rate.
The central bank said tighter monetary conditions would need to remain in place for longer to bring inflation back to 4%.
It forecasts current price growth will return to 4% during the first six months of 2027.
The bank said inflation expectations among households remained close to their highest levels in two years.
- Who
- Elvira Nabiullina, governor of the Bank of Russia.
- What
- She said room for key rate cuts next year remains but has narrowed.
- When
- October 23, 2026, after the Bank of Russia Board meeting.
- Where
- Moscow.
- Why
- The bank cited high inflation expectations and said a persistently high budget deficit would raise the neutral key rate.
This story does not have two clearly opposing sides.
The Bank of Russia Board met and discussed the key rate level.
The central bank said room for rate cuts would remain, though it had narrowed.
The bank forecasts current price growth rates will return to 4%.
The bank expects the economy to restore withdrawn capacities, while saying the pace is difficult to forecast accurately.
- Rate-cut outlook
- Room remains for cuts next year, but it has narrowed
- Governor
- Elvira Nabiullina
- Inflation target
- 4%
- Inflation forecast
- Current price growth rates to return to 4% in the first six months of 2027
- Capacity recovery
- The bank expects withdrawn capacities to be restored in 2027
2 sources
What people are saying
has become smaller.
The neutral key rate will be higher if the budget deficit is persistently high.
No significant changes in monetary conditions occurred in real terms,