The Central Bank of Russia (BCR) decided to maintain the reference rate at 14% per year, after several consecutive marginal reductions. The decision was made after the Russian banking regulator observed growing price pressure in recent months, with price pressures intensifying significantly.
According to the BCR, underlying price growth accelerated to an annual rate of between 5% and 6%, mainly due to the impact of a temporary reduction in production capacity in certain sectors. In July, price growth was 11.6% compared to the previous year, compared to an average of 5.3% during the second half of the year. The corresponding underlying inflation indicator increased to 7%.
The regulator indicated that the increase in fuel prices, caused by Ukrainian attacks on Russian refineries and the shortage of gasoline and diesel, impacted inflation dynamics. Inflation expectations among households, businesses, and financial markets remain elevated, which could hinder a sustained slowdown in inflation.
In the baseline scenario, the BCR forecasts that annual inflation will fluctuate between 6% and 7% in 2026, return to 4% in 2027, and remain at the target level thereafter. The next monetary policy meeting will take place on October 23.
