UPDATE2: Russian econ minister sees room for cbank key rate reduction

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MOSCOW, Mar 16 (PRIME) -- Russia’s central bank could reduce the key rate at the forthcoming meeting on Friday because inflation is slowing down, Economic Development Minister Alexei Ulyukayev said at a meeting with lawmakers on Wednesday.

“It is clear that there is a significant resource to make a tradeoff to borrowers by decreasing general rates in the economy,” Ulyukayev said.

Russia’s annual inflation amounted to 7.9% as of Wednesday, while it was 12.9% as of the end 2015. “Perhaps (the key rate of) 11% was a sensible step for that inflation. It has fallen by more than 3% by today.”

Ulyukayev confirmed his earlier inflation forecast for 2016 at 7–7.5%.

He also said that the central bank’s key rate can be reduced to a one-digit level but the timespan is unclear so far. “I would not like to specify concrete terms but there is such possibility, undoubtedly.”

Andrei Kostin, CEO of second-largest Russian bank VTB, believes that the central bank may decrease the key rate by 0.5 percentage points on Friday, he said in an interview to Rossiya 24 TV channel.

“I believe these are preconditions for the central bank to decrease the rate by a half of a percentage point… at the forthcoming meeting. It is my presumption,” he said.

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