MOSCOW, October 23. /TASS/. The Bank of Russia has decided to maintain its key rate at 14% per annum, stating that current price pressures remain elevated, according to the regulator's press release.
TASS has compiled the key details of the decision.
Regulator’s press release
- The Bank of Russia's Board of Directors has decided to maintain the key rate at 14% per annum.
- The economy as a whole is growing at a moderate pace in the second half of 2026.
- Current price pressures remain elevated, and inflation expectations remain high.
- According to the Bank of Russia's assessment, underlying price growth is not slowing and remains within the 5-6% range on an annualized basis, primarily due to the impact of temporary capacity constraints in certain industries.
- This requires restrained growth in aggregate demand to resume a decline in underlying inflation, the Central Bank emphasized.
- The Bank of Russia noted that it will make further decisions on the key rate depending on inflation dynamics and inflation expectations, as well as an assessment of risks from domestic and external conditions.
- In Q3 2026, seasonally adjusted price growth averaged 8% on an annualized basis, up from 4.8% in Q2 2026.
- The corresponding core inflation rate increased to 6.2%, up from 4.5% in the previous quarter.
- Price dynamics continued to be influenced by volatile items, primarily motor fuel, the regulator noted.
- Annual inflation stood at 6.8% as of October 19 and is projected to settle within the 7.1-7.6% range by year-end.
- High inflation expectations are hindering a slowdown in inflation.
- Despite a slight decline in household and business expectations in October, overall, they have remained near their highest levels in two years in recent months, the Central Bank emphasized.
- The expectations of financial market participants and analysts have increased.
- According to high-frequency data, the economy is growing at a moderate pace in the second half of 2026.
- Business sentiment improved slightly in October following the low levels of previous months.
- Consumer demand growth is slowing but remains elevated, the Central Bank pointed out.
- Investment activity continues to recover compared to levels at the beginning of the year.
- Tensions in the labor market are gradually easing.
- According to surveys, the supply of workers at enterprises continues to improve, but the situation remains uneven across industries, the Central Bank noted.
- Wage growth is slowing and gradually converging with productivity growth.
- However, the gap in their dynamics remains significant, the regulator emphasized.
- At the same time, companies plan more moderate wage indexations in 2027 compared to 2026.
- Unemployment remains near historical lows.
- Lending activity was elevated on average in Q3 2026, driven primarily by the corporate segment.
- The retail loan portfolio grew moderately, the regulator noted.
- Households' propensity to save has declined somewhat but remains high.
- The Bank of Russia is proceeding from the announced fiscal policy parameters.
- Over the medium term, this will contribute to a slowdown in inflation.
- If fiscal policy parameters change, monetary policy may need to be adjusted, the regulator pointed out.
Ruble reaction
The ruble slowed its gains on the Moscow Exchange following the Bank of Russia's decision to maintain the key rate at 14% per annum, trading data showed.
Prior to the announcement, the yuan was trading at 12.037 rubles, down 12.8 kopecks, according to data as of 1:25 p.m. Moscow time.
By 1:30 p.m. Moscow time, the yuan paired its losses to 11.45 kopecks, trading at 12.05 rubles.
MOEX reaction
The MOEX Index turned lower following the central bank's decision to hold the key rate at 14% per annum, trading data showed.
As of 1:25 p.m. Moscow time, ahead of the rate announcement, the MOEX Index was up 0.22% at 2,434.74 points.
The RTS Index stood at 945.44 points, up 0.22%.
By 1:30 p.m. Moscow time, the MOEX Index reversed its gains to trade down 0.45% at 2,418.68 points.
The RTS Index also slid 0.45% to 939.21 points.