The monetary policy of the Bank of Russia for the coming years will be strictly subordinated to a single goal—achieving price stability, even amid turbulence in the global economy. The regulator has presented updated macroeconomic forecasts covering four different scenarios for developments through 2029. The key takeaway: in the risk case, the rate could soar to 21%, which would become a serious stress test for the entire financial system.
New Order and Horizons
First of all, the Central Bank is changing the technical regulations: now, changes to the key rate will take effect on Wednesday, rather than Monday, as before. In my view, this signals a drive toward more prompt and flexible responses to market changes. At the same time, the regulator emphasizes that the effect of a rate change does not appear immediately but with a lag of 3–6 quarters, which is critically important for understanding current decisions.
Baseline, Disinflationary, and Pro-Inflationary Scenarios
In the baseline scenario, the Central Bank expects the rate to decline to 14.5–14.6% in 2026 and further gradually decrease to 7.5–8.5% by 2029. Inflation should return to the target 4% as early as 2027. The disinflationary scenario assumes faster cooling of prices—to 3–4% in 2027—which would allow the rate to drop to 9–11% as early as next year. Conversely, the pro-inflationary option envisions maintaining the rate at a high level of 13–15% in 2027 due to sustained price pressure.
Risk Scenario: Peak Rate and Recession
The risk scenario looks the most alarming. Here, the Central Bank forecasts that in 2027 the key rate could reach 19–21%, and inflation would accelerate to 11–13%. At the same time, the economy would face not just a slowdown but a full-blown recession: a GDP decline of 3–4% in 2027. This is an extremely harsh but, unfortunately, realistic scenario for the case of large-scale external shocks.
Fiscal Impulse and Cash
I would separately note that the regulator has revised its assessment of the fiscal impulse upward. This means that fiscal policy will exert stronger pro-inflationary pressure than previously assumed, which further limits the room for monetary policy easing. The dynamics of cash are also curious: its growth in the first half of 2026 was higher than in 2024–2025, which the Central Bank attributes to declining deposit rates and citizens' desire to hold liquidity "for a rainy day."
My analysis: The presented scenarios are a clear signal to the market that the period of "expensive money" will drag on. Investors and businesses should prepare for a prolonged phase of high volatility, and the risk scenario with double-digit inflation and recession should be viewed not as a theoretical abstraction but as a quite probable stress case for strategic planning.