November 11, 2019 / 10:11 AM / a month ago

Russian central bank sees room for further rate cut

MOSCOW (Reuters) - The Russian central bank has room to cut rates further and expects inflation to bottom out at 3% in the first quarter of 2020, First Deputy Governor Ksenia Yudayeva said on Monday.

The central bank has cut its key interest rate four times since June as inflation, its key area of responsibility, has slowed along with economic growth, which was hit by weak investment and a sluggish rise in households’ incomes.

Yudayeva, speaking at the lower house of parliament, said the central bank’s board of directors will consider several factors when it holds the next rate-setting meeting on Dec. 13.

“In principle, we currently see certain room for a further reduction, but we have to follow the situation very closely, to watch for the effects of measures that have already been put in place,” Yudayeva told lawmakers.

Yudayeva gave no direct answer to the question if the central bank was ready to consider cutting the key rate, now at 6.5%, by 50 basis points at once, as it did in late October.

“The situation needs to be watched for now: Not so much time has passed since the last (board) meeting,” Yudayeva said, adding that the central bank has to assess all factors that can impact inflation.

Yudayeva also said that inflation is set to decline to 3% in the first quarter of 2020, driven by technical factors.

The central bank had forecast inflation to reach its 4% target later in 2020.

Reporting by Elena Fabrichnaya; Writing by Andrey Ostroukh

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