Bank of Russia Says Key Rate Could Reach Single Digits by End of 2026

Bank of Russia: the key rate could reach a single-digit level by the end of 2026, but this is not a predetermined scenario. Kirill Tremasov, advisor to the governor of the Bank of Russia, said that the forecast trajectory of the key rate allows for the possibility of it falling to a single-digit level by the end of 2026, though everything will depend on how the situation develops. He made the remarks at the XVI Festival of Science of Southern Russia in Rostov-on-Don.

According to Tremasov, the central bank's official forecast assumes an average annual rate of 12–13% for next year. "If, for example, the rate continues to fall by the end of this year — I don't know whether it will keep falling or what level it will reach, but suppose it is 15% at the end of this year, and the average annual value for next year is 12–13%, then theoretically one cannot rule out that by the end of (2026) it could be a single-digit figure. Yes, such a scenario is possible, but it is far from a predetermined trajectory," he explained.

At the same time, the advisor to the governor of the regulator stressed that the rate reduction itself will take place as inflation declines, but it is still too early to talk about "at what angle and with what gradient" this reduction will proceed. In his words, one of the important reference points will be the adoption of the budget for next year.

What the Bank of Russia's July forecast assumes

The Bank of Russia's July forecast assumes an average key rate of 18.8–19.6% for 2025 and 12–13% for 2026. Tremasov noted that the forecast will be refined after the October key meeting of the central bank's board of directors on the rate.

The Bank of Russia on September 12 decided to cut the key rate by 100 basis points, to 17% per annum. Most analysts had forecast a reduction of 200 basis points. The regulator accompanied its decision with a neutral signal about the future direction of monetary policy.

Key points of the current situation:

• The key rate now stands at 17% per annum after the 100-basis-point cut on September 12;
• The average rate is forecast at 18.8–19.6% for 2025 and at 12–13% for 2026;
• A single-digit rate by the end of 2026 is possible, but not predetermined;
• The next board meetings on the rate are scheduled for October 24 and December 19, 2025.

Thus, the Bank of Russia is maintaining a cautious approach: the direction of easing is confirmed, but the pace and the final level of the rate remain dependent on the dynamics of inflation and on the parameters of the federal budget. The regulator will update its forecast at the October meeting, which will be key for understanding the further trajectory of monetary policy in Russia.