UPDATE: Report: Russian cbank may speed up key rate cut on high oil prices

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MOSCOW, Sep 23 (PRIME) -- Russia’s central bank may cut its key rate faster if oil prices are higher or the economy is in a better shape than it is expected in the central bank’s baseline development scenario, the regulator’s Chairwoman Elvira Nabiullina said in an interview with CNBC broadcast Friday.

On September 16, the central bank lowered the key rate by 0.5 percentage points to 10% in the light of slowing inflation and lower inflationary expectations amid unstable economic activity. The authority also said that the key rate is unlikely to be reduced again this year.

“We have been saying that a reduction in the rate is very unlikely. But of course if any extraordinary events occur. For example if there is a much higher oil price because of certain other circumstances or drivers which suggest that the overall economic dynamics and inflationary dynamics will be better than those used for our base scenario, which of course can happen,” Nabiullina said.

“However, we do not see a high probability of these sorts of events unfolding,” she added.

The bank’s September 16 decision to decrease the rate does not have a significant impact on Russia’s economic growth as its problems are connected to structural limitations in the first place.

“We are making decisions with regards to their effect on the economy and economic growth and the willingness of businesses to invest. The first thing we see is that the key limiting factor for investment is not so much our high rate and tough monetary policy but rather structural limitations, the investment climate’s state and so on,” she said.

“Therefore, we believe that through our rate decision we will not be reducing economic growth and that the problems of economic growth have their root in structural limitations.”

The regulator’s baseline scenario envisages the average annual oil price of U.S. $40 per barrel in 2017–2018.

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