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- A two-digit answer: experts expect a reduction in the key rate only in February 2027.
A two-digit answer: experts expect a reduction in the key rate only in February 2027.
The Central Bank will reduce the key rate no earlier than February next year, experts interviewed by Izvestia predict, and the step will be symbolic — 0.25 percentage points. This will happen if favorable factors develop: annual inflation will approach 5%, inflation expectations will decrease, commodity markets will stabilize, and government spending will be kept within strict budget limits. However, there is a possibility that the mitigation cycle will begin even later — only in March 2027. In any case, the key next year will remain in double digits, analysts agree. This will lead to a slowdown in the inflow of funds for deposits, maintaining restrictive conditions for market mortgages and a squeeze on business investments. How the era of high interest rates will affect economic growth, deposits and loans of Russians — in the material of Izvestia.
When will the key rate be lowered in Russia
At the last meeting of the board of directors of the Central Bank in 2026, it is likely to keep the key rate at 14% again, according to experts from major banks and investment companies interviewed by Izvestia. The Central Bank had already made the same decision twice before, in October and September.
— According to the Central Bank's comments on the results of the October meeting, for the first time in recent years, the regulator has not even considered a rate cut. There is a dominance of pro-inflationary risks caused by budget parameters, rising inflation expectations, the loss of production capacity, and credit growth. All this makes the probability of a reduction in the key rate by the end of 2026 near zero," said Maxim Tymoshenko, Director of the Financial Markets Department at Russian Standard Bank.
However, already at the first meeting of the board of directors in 2027, the Bank of Russia may resume the cycle of monetary policy easing, according to Izvestia's consensus forecast. The move is likely to remain cautious - minus 0.25 percentage points, said Alexander Bakhtin, investment strategist at Garda Capital.
— In order for the Central Bank to lower the key rate in February, the degree of influence of one—time factors on price growth should decrease, and potentially annual inflation should return at least closer to 5% (annual inflation as of October 26, 2026 was 7.11% — Ed.). Factors in favor of continuing the rate cut will also be stabilization of inflation expectations, credit activity, the absence of new external and internal shocks," explained Natalia Pyrieva, head of the analytical department at Digital Broker.
To reduce the rate, it is also necessary to restore supply in certain commodity markets, and additional conditions will be the restrained dynamics of government spending at the beginning of the year and compliance with the stated budget parameters, added Pavel Biryukov, chief economist at Gazprombank.
However, it is likely that all these factors will become stable only by the end of the first quarter, by the March meeting, when a window of opportunity for a rate cut will open, Mikhail Vasiliev, chief analyst at Sovcombank, admitted. In any case, the regulator will act cautiously and ease policy slowly, and rates will remain in double digits by the end of 2027, experts interviewed by Izvestia are convinced.
— In the baseline scenario, the Bank of Russia is expected to slowly reduce the key rate from 14% in early 2027 to 13% by the end of 2027 (an average of 0.25 percentage points per quarter). In an optimistic scenario, if geopolitics improves, the budget deficit remains within the plan, and the situation in the fuel market improves, a faster reduction in the key rate to 11-12% is possible by the end of 2027. In a risky scenario, in the event of sustained inflation at elevated levels, rising inflation expectations, negative surprises from geopolitics, and continued problems in the fuel market, the Bank of Russia may even raise its key rate to 15-16% in 2027, Mikhail Vasiliev expects.
How the double-digit key rate affects loans, deposits and mortgages
Although a gradual decrease in the key rate will lead to the fact that by the end of 2026, the increase in household funds in banks will slow down to 11% from 16% in 2025, said Denis Popov, managing expert at the PSB Center for Analytics and Expertise.
— The savings activity of the population is influenced by the active consumption and outflow of funds into cash. In 2027, a more pronounced slowdown in household incomes will be added to these trends, which will reduce the growth of individuals' funds in banks to 9.5%. On the contrary, corporate funds in banks will continue to accelerate growth somewhat (from 1.4% in 2025 to 6% in 2026 and 9% in 2027), including due to a weaker ruble exchange rate and a gradual increase in economic activity, Denis Popov expects.
Deposit rates, if they fall below 12%, will only fall by the end of 2027, so the accumulated funds will not have time to flow into the economy, according to Ilya Fedorov, chief economist at BCS World of Investments. However, qualitative changes are already taking place: citizens are largely "eating up" accrued interest, and bank liabilities are increasing barely faster than inflation, the expert said.
Retail lending will also continue to grow, but in different directions by segment, VTB expects. Cash loans remain the main driver of new disbursements in 2026. According to the bank's estimates, sales will grow by 66% by the end of the year, and car loans will increase by 15%. Clients who have a need for borrowed funds are applying for loans now, including in their financial plans the possibility of refinancing at a lower rate as it gradually decreases, the financial institution added. This, in turn, mitigates the effect of high interest rates, which the Central Bank is counting on.
Mortgages are particularly hard hit by maintaining double-digit rates amid the curtailment of government programs (in the fall of 2026, the authorities significantly tightened the conditions for obtaining a family mortgage). Nevertheless, the mortgage loan portfolio will grow at a relatively stable pace, about 7%, mainly due to market programs, Denis Popov predicts.
— In order for a market mortgage without government support to become available to citizens again, the Central Bank's rate should drop to at least 8.5–9.5% per annum. Only then will banks be able to offer customers a final loan rate in the range of 10.5–11.5%, which is perceived by the market as a lift," added Alexander Bakhtin from Garda Capital.
Speaking about the economy as a whole, a prolonged period of high interest rates leads to a reduction in investment in development and to a cooling of business activity, the recovery of which is postponed to the right as businesses need to survive in difficult conditions, stated Natalia Pyryeva from Digital Broker. In 2026, she expects modest GDP growth of 0.5%, and in 2027 — stronger dynamics, about 1%.
— The decline in business profits is already forcing companies to respond by optimizing the payroll by slowing down indexation or reducing staff. This is exactly the effect that the regulator is seeking: in order to bring inflation closer to the target, the growth rate of nominal wages should slow down from the current 10% to 6-8%," explained Ilya Fedorov.
As for corporate sustainability, the recorded cases of defaults mostly occur in the same "chronically ill" companies with technical and repeated defaults, the expert noted. According to him, at the same time, the burden on state finances is increasing: the cost of servicing public debt is increasing, forcing the Ministry of Finance to reduce the structural deficit to zero both through increasing revenues and curbing spending, for which high rates are a basic external given.
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