Accounts Chamber sees risk of tough monetary policy lasting longer than envisaged by Russian budget for 2027-2029

MOSCOW. Oct 13 (Interfax) - The Russian Accounts Chamber believes the Central Bank of Russia is highly likely to maintain a tough monetary policy for longer than is envisaged by the forecast factored into the draft federal budget for 2027-2029.

The Accounts Chamber included this assessment in its conclusion on the draft federal budget law for 2027 and the 2028-2029 planning period. The government submitted the draft bill, numbered 615-9, to parliament on September 30.

The chamber said that this risk had already partly become a reality - the key rate forecast for 2027 has been adjusted from 8%-9% to 10.5%-12.5% in 2026, in accordance with the CBR's mid-term forecast.

The CBR's baseline forecast assumes that inflation will slow down to 4% in 2027. "In order to ensure inflation makes such a sharp return to the target level, the Bank of Russia will conduct a tougher monetary policy than was expected at the start of this year, which will have a negative effect on the dynamic of the economy and will bring with it additional costs for economic agents," the Accounts Chamber wrote.

The conclusion cites several alternative inflation forecasts for 2027, which are above 4%: the Institute of Economic Forecasting of the Russian Academy of Sciences (IEF RAS) forecasts 6.2%, the Center for Macroeconomic Analysis and Short-Term Forecasting (CAMAC) 4.2%-4.5% and the consensus forecast of the Higher School of Economics is at 4.7%. The chamber said that the indexation of infrastructure company tariffs, which is factored into the forecast, is one of the key risk factors for the forecast of the decline in inflation to 4% in 2027.

The Accounts Chamber also commented on the impact of high rates on inflation. "The continuation of tight monetary conditions increases the appeal of the saving behavioral model over the investment model, encouraging companies to place funds in deposits at banks rather than spending them on developing business," it said. Investments in fixed assets will decrease 5.4% in 2026 and grow by just 0.2% in 2027.

The draft federal budget law will be reviewed at a plenary session of the State Duma in its first reading on October 29.