Raised key rate trajectory for 2026 still implies its continued decline, markets reacted correctly to this - Nabiullina
MOSCOW. Dec 2 (Interfax) - Raising the trajectory of the key rate for 2026 still implies a further easing of monetary policy, and markets reacted correctly to this, Central Bank of Russia Governor Elvira Nabiullina said.
"Raising the forecast trajectory is a revision of our expectations for the key rate. Nevertheless, this forecast implies the continuation of monetary policy easing, albeit at a slower pace than we previously expected in our previous forecast, and than markets expected. And in my opinion, the markets reacted absolutely correctly to such a clarification of the forecast," Nabiullina said at VTB's "Russia Calling!" forum.
There was no communication failure in the Central Bank's October decisions on monetary policy, she said.
"What is a communication failure? A communication failure is when markets react differently to what the regulator expects. It seems to me that there were no problems with this in this case," she said.
In October, the CBR updated its forecast for the average key rate for 2025 from 18.8%-19.6% to 19.2% and raised it from 12%-13% to 13%-15% for 2026.
In October, the Central Bank lowered the key rate by just 50 basis points to 16.5%.
"There is no communication failure here, no mistake. The decision we made to lower the key rate [in October], albeit by a small step, is a continuation of the easing of monetary policy. By the way, I think many companies with floating-rate loans, which is now the dominant method, have felt this themselves," Nabiullina said.
No analyst expects inflation in 2026 to fall below the 4% target, she said.
"This means that no one believes that we currently have an excessively tight monetary policy, an excessively tight monetary policy trajectory, which would lead to an overshoot of inflation downwards. We believe that financial market participants draw qualitatively correct conclusions, and like the Central Bank, adjust forecasts if a new portion of fresh data comes out and there are grounds to revise trends," she said.
