Chairwoman: Cbank sees room for key rate reduction on June 19

MOSCOW, Jun 5 (PRIME) -- Russia’s central bank sees room for further reduction of the key rate at the coming meeting of its board of directors on June 19, and an option of a 1 percentage point cut is also possible, Chairwoman Elvira Nabiullina said during a news conference on Friday.

“I can affirm once again that we see room for reduction of the rate, and a cut by 100 basis points will be considered among other options at the next meeting of the board of directors. But we will make a decision basing on the data we have already received and will receive, and on our elaborated inflation and gross domestic product (GDP) forecasts,” she said.

In April, the central bank reduced the key rate by 0.5 percentage points to 5.5% annually.

The central bank sees a rising influence of disinflationary factors in May, Nabiullina also said.

“As to inflation, we can see a fall in inflationary pressure and a rise in influence of disinflationary factors in May. Weekly inflation amounted to nearly zero during the May holidays, and in the two last weeks it stood at 0.1% per week. The dynamics may be partially reflecting softening of the restrictions,” she said.

Nabiullina said that there are signs of recovery in banking lending as well.

“There are signs of recovery in the lending sector as well. The volume of Russian companies’ liabilities to the banks rose 0.3% from May 25 through May 31, which ensured a 0.4% growth in the entire May, according to preliminary data,” she said.

“The retail loan portfolio grew 0.5% from May 25 through May 31 to cover the fall seen in the first half of the month. Thus, the retail loan portfolio increased around 0.2% in May as compared with a 0.7% fall registered in April,” she added.

Russia’s unemployment figures will be still high in May, but the indicator will gradually fall following recovery of the economy, Nabiullina said.

“We can see rising unemployment on the labor market, which amounted to 5.8% in April. According to our assessment, it is 5.6% in seasonally adjusted terms. Unemployment grew by around 1 percentage point as compared with March, and is seen at the level of early 2016, but it is still much lower than in many large economies,” she said.

“Operational indicators point to some additional rise in unemployment in May, but gradual recovery of the economic activity will provide staged restoration of unemployment figures in the second half of the year,” she added.

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