The Bank of Russia left its key interest rate unchanged at 14% in October, matching market expectations, as persistent inflationary pressures and elevated inflation expectations continued to impede disinflation. Ukrainian strikes on Russian energy infrastructure have disrupted refinery operations, driven crude-processing volumes to multi-year lows, and contributed to fuel shortages, pushing up gasoline prices and transportation costs across the economy.
Inflation accelerated to an annualized 8% in the third quarter, up from 4.8% in the second quarter, while core inflation rose to 6.2% from 4.5%. As of October 19, annual inflation was estimated at 6.8% and is expected to reach 7.1–7.6% by year-end, exceeding the central bank’s earlier forecast.
The central bank noted that capacity constraints, strong wage growth, and entrenched inflation expectations represent significant risks, with pro‑inflationary factors outweighing disinflationary ones. It expects inflation to return to its 4% target in 2027 and projects an average key rate of 12.5–13.5% for that year.
