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- A look into the future: The Central Bank presented four scenarios for the development of the economy
A look into the future: The Central Bank presented four scenarios for the development of the economy
The Bank of Russia has published a draft of the main directions of monetary policy for 2026-2028. The regulator revealed the goals and approaches to conducting the PREP, its view on the current state of the economy and forecasts of its development in the medium term. There are four scenarios in total: basic, disinflationary, pro-inflationary and risky, and experts call the first the most likely. It reflects the current vision of the Central Bank and coincides with the dynamics of recent months, suggesting a slowdown in inflation and a gradual cooling of demand. Izvestia has learned what will happen to the Russian economy in the next three years.
A specific course
The Bank of Russia presented the main directions of monetary policy for the next three years. The regulator has already published a corresponding draft, defining the development prospects in 2026-2028.
The document also analyzes the current state of the economy, in particular, the growth expected in 2025. It turned out to be more moderate than in previous years, although investment activity remains high, including due to government support for priority industries. The increase in demand corresponds to the ability to increase production, and inflation is slowing down. It is expected that in the future the economy will return to the trajectory of balanced and sustainable growth, and inflation will reach the target and gain a foothold on it.
The Central Bank's tight monetary policy has contributed to all this. The regulator has been tightening the DKP since mid-2024, raising the key rate to 21% per annum in October and keeping it at this level until June 2025.
This decision led to the fact that the gap between demand and production potential began to gradually close. The growth of consumer and investment activity slowed, lending cooled, and savings continued to accumulate at a high rate. There were also small signs of a weakening of the staffing shortage.
Convinced of the sustainability of disinflation, the Central Bank moved to lower the key rate in the summer of 2025. The regulator gave neutral signals about further decisions, suggesting the possibility of pauses in the emerging decline.
Against the background of such a state of the economy, the Bank of Russia presented a forecast for the development of the situation for 2026-2028, having developed four scenarios: basic, disinflationary, pro-inflationary and risky.
Predict the future: four forecasts of the Central Bank
The basic scenario is based on the most probable prerequisites for the development of the economic situation in the world and Russia from the point of view of the Central Bank. According to it, inflation in the Russian Federation this year will be at the level of 6-7%, and starting in 2026 it will reach the target of 4%. The key rate in 2025 will be 18.8–19.6%. In 2026, it will be at the level of 12-13%, and in 2027 and 2028 it will be fixed at 7.5–8.5%.
The internal conditions will imply a further transformation of the economy and focus mainly on domestic demand.
The GDP growth rate will slow down in 2025-2026, while the share of investments in GDP will remain high. And in 2027, the economy will move to a balanced growth trajectory. It is expected that citizens' incomes will increase, which will partly support consumer demand, but savings will also accumulate to a greater extent.
Based on external conditions, the regulator believes that the global economy will grow more slowly on average in 2025-2028 than in 2000-2019. Trade contradictions between countries and business volumes will contribute to this. U.S. policy will remain an important factor.
The baseline scenario assumes a decrease in world oil prices over the forecast horizon. At the same time, the central banks of developed countries will continue to soften the PREP. Meanwhile, the continued sanctions restrictions on the Russian economy will continue to restrain the growth of exports and imports.
In the disinflationary scenario, the inflation forecast for the current year remains at 6-7%. However, it is expected to reach 3-4% in 2026. Starting in 2027, inflation will be fixed at the target of 4%.
The key rate in 2025 in this scenario will also be 18.8–19.6%, but will drop to 10.5–11.5% in 2026. In the next two years, it will be at the level of 7.5–8.5%.
It is assumed that in order to intensify production in the face of a growing shortage of personnel, companies will invest more than in the baseline scenario. And effective investment development and accelerated growth of aggregate factor productivity will lead to a significant increase in the supply of goods and services, which will fully cover domestic demand in the next two years.
In terms of the prerequisites for the global economy and geopolitical conditions, the disinflationary scenario coincides with the basic one.
The next scenario, which is pro—inflationary, assumes that the inflation rate will remain at 6-7% in 2025. However, unlike the previous two forecasts, the figure will be 4-5% in 2026. In 2027 and 2028, at the same time, inflation will be at the target.
The key rate in 2025 will also be 18.8–19.6%, but next year it will be at the level of 14-16%. In 2027, the rate will be reduced to 10.5-11.5%, and in 2028 it will reach a value of 8.5–9.5%.
In this scenario, domestic demand will be higher and supply lower than in the baseline scenario. It will take more time and tightening of the PREP to bring inflation back to the target. At the same time, it is expected to expand government measures of a protectionist nature. This will lead to an increase in the cost of imported goods and an increase in demand for domestic products, which will translate into higher prices for them.
Inflationary expectations of citizens and businesses will decrease more slowly than in the baseline scenario and react more sensitively to other pro-inflationary factors.
Increased sanctions pressure will have a negative impact on supply dynamics. It will stifle investment and reduce productivity due to the loss of access to certain technologies.
Another external factor that will affect the economy is the decline in Russian oil prices. They will be lower than in the baseline scenario due to increased sanctions restrictions.
The regulator believes that this scenario is more likely than a disinflationary one.
The last scenario prescribed by the Central Bank turns out to be risky. In his case, inflation in 2025 will be at the same level as in other forecasts, but will amount to 10-12% in 2026. In 2027, it will reach 8-10%. It will not be possible to fully reach the target even in 2028, since inflation will be 4-4.5%.
The key rate will also be at high values. If it remains at the previously predicted levels this year, it will amount to 16-18% in 2026. In 2027, the PREP will be tightened, and the rate will be at the level of 18-20%. It will drop to 10-11% only in 2028.
This scenario assumes a significant deterioration in external conditions in 2026, which will negatively affect the Russian economy and accelerate inflation. In this regard, a more rigorous PREP will be required.
The potential and growth rate of the Russian economy will decrease against the background of the global financial crisis and increased sanctions pressure. This will trigger a decline in GDP for two years.
It will require a transformation of the budget rule with a gradual transition to new levels of the base oil price. The price of black gold is expected to be $45 per barrel in 2026 and $40 per barrel from 2027.
Among the external conditions that will affect the state of the Russian economy, the regulator highlights a sharp escalation of tariff restrictions, which will lead to a hard landing of the largest economies, negative developments in the capital market, falling global demand amid the recession in the economies of the United States and the eurozone, as well as a slowdown in economic growth in China.
However, the probability of this scenario being realized, according to the Central Bank, is low.
The editorial board of Izvestia sent a request to the Bank of Russia. No response has been received at the time of publication.
According to a clear scenario
The Bank of Russia has confirmed its commitment to a strict and consistent policy in the draft "Main directions of the DKP for 2026-2028", maintaining the July macro forecast, draws the attention of Yulia Kuznetsova, President of the Association of Financial and Investment Advisers. The main objective of the regulator remains to reduce inflation to 4% and maintain long-term price stability. All this sets the framework for both the key rate and monetary conditions.
During the specified planning period, the Central Bank will continue to pursue an inflation targeting policy, while the key rate will remain the main instrument of the DKP, according to economist Lazar Badalov.
— This approach causes some controversy, but despite all the criticism, the Central Bank continues to adhere to the opinion about the effectiveness of the chosen model, while not refusing to make certain policy adjustments. For example, in addition to the Central Bank's rate, macroprudential limits have been applied," the expert clarifies.
The Central Bank's main strategy remains to focus on domestic demand, which was a determining factor in previous decisions, said Mikhail Tkachenko, head of investment practice at the vvCube consulting group.
"On the one hand, the Central Bank will adhere to this strategy, and on the other hand, it will strive to reduce inflationary risks," the expert believes.
The basic, disinflationary and pro-inflationary scenarios proposed by the Bank of Russia do not differ much from each other, Lazar Badalov points out. According to the results of the planned period, the rate, the ruble exchange rate, the cost of oil and other indicators will be in the range of these scenarios, he believes.
Yulia Kuznetsova is confident that the most likely scenario for the development of the situation with the Russian economy will be the baseline, as it reflects the current vision of the Central Bank and coincides with the dynamics of recent months, suggesting a slowdown in inflation and a gradual cooling of demand.
— But the risk scenario assumes a crisis situation, and an acute and global one at that. Therefore, the chances of its implementation are low," Badalov believes.
Meanwhile, Mikhail Tkachenko sees an element of risk in the baseline scenario, given concerns about foreign economic policy and uncertainty surrounding peace talks.
Probability theory
The probability of returning to the inflation target is quite high, Yulia Kuznetsova believes. The Central Bank's policy has already produced results — prices are falling.
"But the sustainability of this result depends on external factors — geopolitics, sanctions, and commodity markets,— warns Izvestia's interlocutor.
Finding the key rate at 10% is possible under two conditions, she notes. Inflation should consolidate near the target, and pressure from the budget and consumer demand should decrease.
A return of the key rate to a level below 10% is possible only if the forecast for GDP is fulfilled, as well as the scenario for the cost of a barrel of oil, energy prices and the dollar exchange rate, Mikhail Tkachenko clarifies. Realistically, according to Kuznetsova, this is possible no earlier than the end of 2026.
In the planned period up to 2028, the 4% inflation target can be achieved either by continuing a tight monetary policy or by sharply tightening an extremely soft fiscal policy, Vadim Kovrigin, associate Professor at Plekhanov Russian University of Economics, does not rule out. However, in the context of geopolitical problems, it is unlikely to be possible to cut budget expenditures, he believes. Therefore, he sees the scenario of reaching a key rate below 10% in 2027 as overly optimistic.
— By 2027-2028, the key rate may be reduced to 10%, but not lower. Inflation in the context of high budget expenditures, parallel imports and limited export opportunities will be above 4% in the next three years. To achieve the 4% target, the key rate will have to remain above 10%, the expert predicts.
Lazar Badalov shares a similar point of view. He recalls that the Central Bank believes that the key rate will reach a neutral 8% in 2-3 years, and inflation will approach the target. But given that over the years of targeting policy, the regulator has rarely been able to achieve its targets, this period is unlikely to be an exception.
However, there is a possibility that the rate will drop below 10% next year, the economist admits.
— The fact is that there are many industries in the economy suffering from high interest rates, and the Central Bank needs to respond to this. It will be very difficult for the economy without a significant reduction in the key rate, which is 10-12%. Therefore, it remains to be hoped that the Central Bank will adjust its policy in time, taking into account the incoming alarming data," the Izvestia interlocutor emphasizes.
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