Report: Cbanker says gradual softening of monetary policy possible

MOSCOW, May 11 (PRIME) -- The central bank may soften the monetary policy, and the key rate may be gradually decreased to 6.5–6.75% annually if inflation stabilizes at around 4%, Chairwoman Elvira Nabiullina said in an interview to a bulletin of PR-company EM A.M. published on Thursday.

“According to our analysis, stable balanced or neutral nominal interest rates will amount to 6.5–6.75%, and our inflation target stands at 4%. Thus, there is a possibility for softening the policy, as our key rate currently stands at 9.25%,” she said as cited by the bulletin.

“But we can’t see how fast we may be able to cut the rate to its nominal neutral rate. These dynamics has not been defined.”

She added that the bank prefers gradual changes in its policy.

“It is better to make small steps instead of a significant slash of the rate and a further increase of the rate due to an unexpected shock,” she said.

On April 28, the central bank cut the key rate to 9.25% annually from 9.75% as inflationary expectations fall and economic activity rises.

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