Russian central bank holds key rate, signals future cuts

Credit: REUTERS/Maxim Shemetov

Russia's central bank held its key interest rate at 7.75 percent on Friday in line with market expectations, but said it could consider cutting rates as early as June.

Adds c.bank comment, details

MOSCOW, April 26 (Reuters) - Russia's central bank held its key interest rate at 7.75 percent on Friday in line with market expectations, but said it could consider cutting rates as early as June.

Analysts polled by Reuters this month had unanimously expected the central bank to hold the rate for a third consecutive board meeting this year.

"If the situation develops in line with the baseline forecast, the Bank of Russia admits the possibility of turning to cutting the key rate in Q2-Q3 2019," the central bank said in a statement.

The bank had initially predicted that inflation would peak at 5.5 percent before slowing to its 4 percent target next year. But inflation, the main economic indicator it tracks, has been slightly lower than expected, hitting 5.3 percent last month.

The central bank, which has said that two rate hikes last year seemed sufficient to curb rising consumer prices, said that inflation had passed its peak last month.

Expectations that the central bank will cut rates later this year have fuelled demand for OFZ government bonds in recent months because investors are eager to purchase the papers before their prices increase proportionally to a potential future cut.

The rouble was unchanged against the dollar from a level of 64.83 seen just ahead of the central bank's decision. RUBUTSTN=MCX

The April rate decision is considered as interim because it is not followed by a news conference by Elvira Nabiullina, governor of the central bank.

The next rate-setting meeting, scheduled for June 14, will be followed by a news conference at which Nabiullina will shed more light on the central bank's monetary policy.

(Reporting by Gabrielle Tétrault-Farber and Andrey Ostroukh Editing by Andrew Osborn)

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

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Reuters

Reuters, the news and media division of Thomson Reuters, is the world’s largest international multimedia news provider reaching more than one billion people every day. Reuters provides trusted business, financial, national, and international news to professionals via Thomson Reuters desktops, the world's media organizations, and directly to consumers at Reuters.com and via Reuters TV.

Learn More