Central bank says maintains signal of possible key rate cut

MOSCOW, Dec 5 (PRIME) -- The Russian central bank maintains the signal that it can consider a key rate reduction, head of the monetary policy department Alexei Zabotkin told PRIME in an interview published on Thursday.

“Concerning the forthcoming meeting, the signal perhaps stays the same as the one formed by the board of directors in October. I mean, the board of directors will assess whether a further key rate reduction is reasonable,” Zabotkin said.

The central bank last cut its key rate in October, to 6.5% from 7%. The regulator has cut the rate by 1.25 percentage points since the start of the year.

In its latest statement, the central bank said that if the situation develops under its basic scenario, it will assess the possibility of reducing the rate at one of the board of directors meetings. The next meeting will take place on December 13.

Zabotkin said that the latest statistics fit the central bank’s basic forecast revised after the October meeting of the board of directors.

The central bank has only recently embarked on a neutral monetary policy, Zabotkin said. “In this sense, we emphasize that the economy has entered a phase when it exists in conditions of inflation close to the target of the Central Bank of Russia and with the rest of the features and the key rate close to the level we see neutral. This has just happened, in fact,” he said.

The authority sees a neutral key rate at 6–7% with 4% inflation. It can take years for the estimate to change, he said.

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