Central Bank of Russia's Oct discussion summary again demonstrates unanimity on both rate, signal

MOSCOW. Nov 5 (Interfax) - The summary of the Central Bank of Russia's October board meeting published on Thursday again demonstrated unanimity on both the key rate and policy signal.

The CBR board in October 23 decided to hold the key rate at 14% per annum, as expected, and for the second time after lowering it at ten consecutive meetings. All analysts polled ahead of the October meeting expected the monetary easing pause to continue in view of pro-inflationary risks in the third quarter triggered by the force-majeure closure of some industrial and logistics capacity, as well as lending dynamics. The experts differed only in whether the policy signal would again be neutral, or more hawkish.

"Following an analysis of new data and discussion of the forecast, a broad consensus emerged in favor of holding the key rate at 14%," the regulator said in the summary, without mentioning, as in the September rate discussion summary, whether any alternative had been debated.

The CBR gave a few key arguments for pausing rate reduction. Firstly, pressure from underlying inflation is still intense. Most seasonally adjusted annualized underlying inflation indicators have been in the 5%-6% range and have shown no sign of falling. "The indirect and secondary effects of the temporary loss of capacity have been more significant than first expected. Inflation expectations remain high, and impact of the October indexation of housing and utility charges on them might not have been fully manifested. Given the emerging price trend, inflation for 2026 is expected to be higher than the July estimates," the summary says.

Secondly, the CBR draws attention to the fact the positive gap in output has again started to widen. "Domestic demand continued to increase in Q3 2026, and the temporary loss of some industrial capacity restricted demand. In these conditions, monetary policy must continue to moderate domestic demand in order to dully close the positive output gap," the summary says.

Also, lending activity remained elevated in Q3, especially in the corporate segment. Monetary policy continued to moderate domestic demand. Growth in consumer activity slowed, despite a gradual drop in the propensity of households to save, and investment activity recovered only gradually.

Finally, the CBR mentioned the still-significant contribution of fiscal policy to domestic demand. "New fiscal projections call for a somewhat faster reduction of the structural primary deficit than was anticipated in July. This will remain non-zero in 2026-2028, and government demand will be elevated. Amid limited scope to increase supply, this will require subdued dynamics for other components of domestic demand to ensure sustained disinflation," the summary says.

"Discussants said that holding the key rate would help to keep monetary conditions sufficiently tight, to moderate growth in domestic demand and to put the conditions in place for underlying inflationary pressure to start to ease again," it said.

As for the signal about monetary policy going forward, the summary said only that discussants "saw no grounds" to give one.