Bank of Russia Maintains Key Rate at 14% Amid Rising Price Pressures

MOSCOW, September 11. /TASS/. The Bank of Russia decided to keep the key rate at 14% per annum, noting that current price pressures have increased in recent months.

TASS has compiled the key statements the Bank of Russia Governor Elvira Nabiullina made at press conference following the regulator's board meeting.

Key rate

The Central Bank discussed maintaining the rate in detail today: "And, perhaps, the difference compared to the previous meeting is that we did not substantively discuss cutting the rate."

The scope for future rate cuts will be clarified in October.

High inflation expectations limit the room for cutting the key rate: "This is one of the factors limiting the scope for further key rate cuts and requiring a very cautious approach from us."

Maintaining the rate will foster moderate growth in domestic demand "so as to prevent the escalation of second-round effects."

Monetary policy is now expected to be tighter, the current scope for cutting the key rate is smaller than anticipated in the first half of the year.

"Every additional ruble" of state-driven demand stimulus moves the Central Bank further away from cutting the key rate.

The Central Bank does not plan to keep the rate at a level the economy cannot sustain for long: "If the rate level is, so to speak, unsustainable, it will quickly lead to a cyclical downturn -- that is, to rising unemployment, falling real incomes, and a drop in underlying inflation below the Central Bank's targets."

Rising prices and the fuel market situation

The acceleration of price growth during the summer months was driven primarily by the fuel market situation: "This is a one-off factor, but we see it affecting the prices of a broader range of goods and services."

According to the regulator, the situation in the fuel market will gradually stabilize: "We base this on the measures being taken by the government and by companies with government support -- they are implementing all necessary and possible measures to restore lost capacity and safeguard it."

Inflation and the ruble exchange rate

Under its baseline scenario, the Central Bank expects a sustained decline in inflation to resume "as the effects of the temporary contraction in production capacity fade, provided that aggregate demand growth remains subdued."

Inflation expectations remain high: "We need more data to assess the scale and duration of these effects and their impact on underlying inflation."

Pro-inflationary risks in the Russian economy have risen: "And they continue to predominate."

The Central Bank is not considering raising the inflation target, calling it "extremely detrimental."

Moderately tight monetary conditions must be maintained to prevent a one-off acceleration in inflation from turning into "a sustained trend."

The Bank of Russia’s objective is to ensure that today's rise in gasoline prices "does not turn into high inflation tomorrow."

The current ruble exchange rate is "very close to business expectations."

The pass-through of ruble exchange rate dynamics to inflation has slowed in recent years, and the exchange rate's impact on prices remains moderate.

Demand for imports is rising in Russia, a factor that contributed, among other things, "to some weakening of the ruble during the summer months."

Impact of UAV attacks

"As for the impact of UAV attacks on supply chains, the effect on inflation has so far been quite low -- negligible."

Budget

The Central Bank expects budget parameters to be clarified "by the end of September."

The regulator has not changed its estimates regarding budget parameters for the new three-year period.

National economy

Russian economic growth is moving in line with the Central Bank's forecast: "Overall, data for the first half of the year and indicators for the third quarter suggest that economic growth is tracking within our forecast."

The Central Bank assumes that lost economic capacity will be restored by the end of 2026: "Regarding the timeline for restoring lost capacities, we have not changed our assumptions. We anticipate that this recovery will take place by the end of the year."

Investment activity

Investment activity is "gradually recovering" following weak dynamics in the first quarter of 2026.

Labor productivity

Labor productivity growth "continues to lag significantly."

Lending and household propensity to savings

Lending, particularly in the corporate sector, has "accelerated again."

In recent months, the growth of retail lending has "remained quite moderate."

The household propensity to save "remains high."

Digital ruble

The mass launch of the digital ruble proceeded smoothly. Although there were specific technical issues, they were "promptly resolved."