MOSCOW, May 11 (Reuters) - Russia’s central bank governor Elvira Nabiullina said in an interview published on Thursday that she preferred small rate cuts, reiterating there was a need to further dampen inflation expectations.
“The Bank of Russia prefers gradualism in its policy. It’s better to move down by small steps than significantly cut down the rate and then due to an unexpected shock raise it back,” Nabiullina told the EM communications agency.
Nabiullina also said she saw neutral nominal interest rates at 6.5-6.75 percent with the central bank’s inflation target at 4 percent.
She repeated that the central bank considered it possible to restart replenishing the country’s forex reserves once it had met its 4 percent inflation target.
“We will purchase currency for reserves only if the market situation is stable and our operations don’t affect the FX rate,” Nabiullina said. (Reporting by Andrey Ostroukh and Alexander Winning)