Russia’s central bank kept its benchmark interest rate unchanged at 14% Friday as persistent inflation prevented policymakers from easing borrowing costs despite weak economic growth.
The central bank also raised its 2026 inflation forecast to between 7.1% and 7.6%, up from its previous projection of 6% to 7%.
The decision highlights the difficult policy environment facing the Russian economy.
Inflation has remained elevated amid refinery disruptions, government spending and higher utility costs. Consumer prices have risen 6.2% since the beginning of the year, compared with a 4.8% increase over the same period last year.
At the same time, high borrowing costs are restricting economic activity.
The central bank continues to target inflation of 4% and expects inflation to return to that level in 2027.
But policymakers now expect interest rates to remain elevated for longer.
The bank raised its forecast for the average policy rate during 2027 to between 12.5% and 13.5%, reinforcing expectations that monetary conditions will remain restrictive even if inflation gradually declines.
The combination of persistent inflation and weak growth leaves policymakers with limited room to stimulate the economy through lower borrowing costs.
For markets, the decision reinforces the prospect of an extended period of tight Russian monetary policy, with implications for the rouble, domestic credit conditions and businesses operating inside the economy.
The next major test will come from inflation and economic data ahead of the central bank’s December policy meeting.
