Bank of Russia Maintains Key Interest Rate at 14% Annually

Decision to Maintain the Rate at 14%

The Board of Directors of the Bank of Russia, at its meeting on September 11, 2026, decided not to lower the key interest rate, keeping it at 14% per annum. This is the first time since June 2025 that the regulator has paused its cycle of consecutive reductions, which lasted more than a year and included ten steps, causing the rate to fall from 21% to 14%.

The decision is linked to a worsening macroeconomic situation: inflation turned out to be higher than expected, forcing the Central Bank to revise its forecasts and abandon further monetary policy easing at least until October 2026.

Acceleration of Inflation and Its Consequences

In July 2026, the annual inflation rate adjusted for seasonality rose to 11.6%, significantly above the second quarter’s figure of 5.3%. Core inflation also increased — to 7% from 4.6%, indicating growing pressure on consumer prices.

These figures led the Central Bank to raise its forecast for sustainable inflation from the previous 4–5% to 5–6%, explaining the regulator’s reluctance to reduce the rate under current conditions. High inflation increases economic uncertainty and complicates forecasting the situation’s development.

Impact of the Fuel Shock and Production Constraints

Initially, the Bank of Russia viewed the rise in motor fuel prices in July as a temporary phenomenon. However, by September, the regulator acknowledged that this factor has a broader impact, spreading to other goods and services and triggering secondary inflationary effects.

Moreover, the temporary reduction of production capacities in certain sectors negatively affects goods supply, further complicating the inflation situation and limiting opportunities to lower the key interest rate.

The Role of Budget Policy and Risks to Monetary Policy

A key uncertainty factor for the Central Bank remains the budget structure. If the structural primary deficit in October 2026 exceeds the baseline scenario, the regulator will be forced to maintain a tighter monetary policy or even raise the key rate.

This is because budget spending growth beyond planned amounts intensifies inflationary pressure, requiring the Bank of Russia to take restraining measures. The office of Chair Elvira Nabiullina has stated that until inflation stabilizes within 4–5% and budget clarity is achieved, the rate will remain at its current level.

Prospects and Conditions for Rate Reduction

The next Board of Directors meeting of the Bank of Russia is scheduled for October 23, 2026. By that time, the government is expected to submit a budget proposal for the next three years to the State Duma, which will be a key factor in the rate decision.

If the budget parameters align with the baseline scenario and inflation begins to slow, the regulator may resume cutting the key interest rate at the end of 2026. However, the final decision will depend on Russian President Vladimir Putin, who traditionally influences monetary policy strategy.

Conclusion

The Bank of Russia has paused the reduction of the key interest rate at 14% due to accelerating inflation and budget uncertainties, reflecting current economic risks and the need for a cautious approach to monetary policy.