* Central bank holds key rate at 6%, pauses easing cycle
* Bank points at risk of higher inflation, slower GDP growth
* Bank reminds that rouble is free-floating currency
* Next meeting scheduled for April 24 (Adds central bank, analyst quotes)
By Gabrielle Tétrault-Farber and Andrey Ostroukh
MOSCOW, March 20 (Reuters) - Russia’s central bank left rates unchanged on Friday and announced measures to support the economy and markets after the rouble fell amid mounting economic threats from low oil prices and the coronavirus epidemic.
The central bank held its key interest rate at 6% , halting its monetary easing cycle, as analysts forecast in a Reuters poll.
The rate decision was a difficult call for the bank. Central Bank Governor Elvira Nabiullina said the board considered three options — to cut, to raise or to hold rates — which she said was a rare case.
Higher rates, in theory, may help to bolster the weakening rouble and to curb inflationary risks linked to its depreciation.
Lower rates, on the other hand, could help withstand economic slowdown by making lending cheaper, something the U.S. Federal Reserve and the Bank of England, among others, have done recently.
But the central bank said it had decided to hold rates after slashing them six times in a row, because coronavirus-related global market volatility and a sharp drop in oil prices had caused the economic situation to deviate from its forecasts.
Nabiullina said the economy was still on track to grow through 2020 overall. Inflation, the central bank’s key area of responsibility, was seen exceeding the 4% target this year before slowing in 2021.
Nabiullina said the central bank saw the potential for rate cuts in the future, while noting that a rate hike was also possible.
“Assuming oil prices not plunging further and the rouble stabilising around fair levels, we are bound to see rates likely going down, not up, over the course of 2020,” said Dmitry Polevoy, chief economist at the Russian Direct Investment Fund.
The central bank said a package of measures it adopted together with the government will ensure financial stability and will support the economy, while playing down risks of the rouble’s slide.
The new measures, however, were not specifically designed to address the rouble weakness.
Pummelled by a slide in oil prices below $30 per barrel, the rouble has become one of the worst-performing currencies against the dollar this year here
The central bank has already started selling foreign currency on the market for the first time since early 2015 and said it was ready to engage other tools to ensure stability.
The rouble pared gains after the rate decision, sliding to 79 versus the dollar but up from 81.97, its weakest level since early 2016, which it touched on Thursday.
Nabiullina, when asked about risks that the rouble would weaken further, said it was in free float and there was no level or “psychological trigger” at which the central bank would take action to influence the exchange rate. (Additional reporting by Katya Golubkova; editing by Andrew Osborn and Larry King)