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Russian Central Bank retains key rate at 11%

April 29, 2016, 13:35 UTC+3

According to the regulator, inflation risks remain elevated

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Russian Central Bank

Russian Central Bank

© Artyom Korotayev/TASS

MOSCOW, April 29. /TASS/. The Russian Central Bank kept the key rate unchanged at 11% at the recent meeting of the Board of Directors on Friday.

The regulator made the decision against the remaining concerns about inflation risks, the budget deficit in 2016 being the most important among them, Bank of Russia chief Elvira Nabiullina said earlier.

"The Board of Directors notes positive processes of decelerating inflation and reducing inflation expectations, as well as changes in the economy, moving it closer to the phase of recovery growth. At the same time, inflation risks remain at the elevated level," the Central Bank explained its decision.

The statement says inflation is expected to total around 5% in April 2017, and reach the target level of 4% at the end of 2017 . Annual inflation totaled 7.3% in Russia in March 2016.

The bank noted that it would continue gradual reduction of the key rate with the decline of inflation risks.

"The Bank of Russia will proceed with gradual reduction of the key rate at one of the coming meetings of the Board of Directors in case of decline of inflation risks, making possible to more confidently reach the inflation target," the Central Bank said.

The statement also says that the interest rates will continue declining in the Russian economy even if the key rate remains unchanged.

"Decline of interest rates in the economy will continue even if the key rate remains the same. This is largely conditions by scheduled spending of the Reserve Fund’s resources to finance the budget deficit and expected transition of the banking sector to the liquidity surplus as a consequence," the regulator said.

In general, the Central Bank ointed out positive developments in the economy saying it was moving closer to the phase of recovery growth.

The ruble continues growing against the dollar and the euro on the Moscow Exchange after the Central Bank decided to keep the key rate at 11% per annum on Friday.

The dollar rate declines to 64.03 rubles. The euro falls to 72.94 rubles after the key rate data release.

The next meeting of the Board of Directors on the key rate will be held on June 10 and will be followed by a briefing of the Central Bank Governor Elvira Nabiullina.

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