Russian c.bank cannot rule out key rate hike in 2021 - RIA cites governor

Credit: REUTERS/MAXIM SHEMETOV

Russia's central bank does not rule out the possibility of increasing the key rate in 2021, RIA news agency cited Governor Elvira Nabiullina as saying on Friday.

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MOSCOW, Feb 19 (Reuters) - Russia's central bank does not rule out the possibility of increasing the key rate in 2021, RIA news agency cited Governor Elvira Nabiullina as saying on Friday.

Asked whether the rate, which the central bank last week held at 4.25%, could be hiked this year, Nabiullina said: "We do not rule this out, but much depends on the situation. It's impossible to predetermine."

Nabiullina added that its baseline scenario did not take into account disinflationary risks that could lead to a rate cut in 2021.

This week, the central bank said that it may take longer than previously expected for inflation to return to the previously set target of 4%, as inflation is expected to peak at around 5.5% this or next month.

When it held the key rate last week, the central bank said it did not plan to cut rates further. It said it would instead gradually begin to raise them when inflation stabilises near its 4% target.

Nabiullina said on Thursday that the central bank plans to switch its monetary policy to a neutral rate in the next three years and that it could revise its estimate of the neutral rate currently set at 5-6%.

Russia last year slashed rates to support the economy at the height of the COVID-19 pandemic and to counter a sharp drop in the price of oil, the country's main export.

(Reporting by Maria Kiselyova, writing by Gabrielle Tétrault-Farber; Editing by Himani Sarkar and Ana Nicolaci da Costa)

((Gabrielle.Tetrault-Farber@thomsonreuters.com;))

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