RUSSIA-CRISIS/CENTRAL BANK Russia central bank holds key policy rate on inflation worries
Record ID:
140094
RUSSIA-CRISIS/CENTRAL BANK Russia central bank holds key policy rate on inflation worries
- Title: RUSSIA-CRISIS/CENTRAL BANK Russia central bank holds key policy rate on inflation worries
- Date: 11th September 2015
- Summary: MOSCOW, RUSSIA (SEPTEMBER 11, 2015) (REUTERS) VARIOUS OF RUSSIAN CENTRAL BANK BUILDING EXTERIOR HEAD OF RUSSIAN CENTRAL BANK ELVIRA NABIULLINA ENTERING HALL AND BEING SEATED MEDIA (SOUNDBITE) (Russian) HEAD OF RUSSIAN CENTRAL BANK, ELVIRA NABIULLINA, SAYING: "Today, the Bank of Russia took the decision to keep the key rate at 11 percent per annum and in my speech I will comment on the grounds of the decision taken. Recently, some strengthening of inflation risks took place while the risks of further economy cooling also remain in place. The decision taken will contribute to achieving our goal to keep inflation at 4 percent in 2017." JOURNALISTS LISTENING (SOUNDBITE) (Russian) HEAD OF RUSSIAN CENTRAL BANK, ELVIRA NABIULLINA, SAYING: "Overall external conditions remain unfavourable and while taking this decision today we considered increased external risks and based (decision on) micro economic forecast which suggests low pace of the world growth and volatility on the markets. Also oil prices will in the nearest time fluctuate around 50 US dollars per barrel." LAPTOP KEYBOARD (SOUNDBITE) (Russian) HEAD OF RUSSIAN CENTRAL BANK, ELVIRA NABIULLINA, SAYING: "The input of rouble weakening in August into the yearly inflation by December will be around 2 percent according to our estimate. Resting on this assumptions we have corrected inflation forecast - by the end of 2015 it will reach 12-13 percent. However, the yearly inflation in September 2016 will be around 7 percent." JOURNALISTS AT PRESS CONFERENCE NABIULLINA AND MEDIATOR LISTENING TO REPORTER ASKING QUESTION
- Embargoed: 26th September 2015 13:00
- Keywords:
- Topics: General
- Reuters ID: LVA9UII0JLXNG7I7JGKJY8MFIZQK
- Aspect Ratio: 16:9
- Story Text: The Russian central bank left its main lending rate on hold at 11 percent as expected on Friday (September 11), for now putting concerns about stubbornly high inflation before worries about a slumping economy.
"Recently some strengthening of inflation risks took place while the risks of further economy cooling also remain in place. The decision taken will contribute to achieving our goal to keep inflation at 4 percent in 2017," central bank Governor Elvira Nabiullina said at the press-conference in Moscow.
The bank left the rate unchanged following five successive cuts this year that have reduced the rate by six percentage points after an emergency hike to 17 percent last December.
The decision to hold rates steady underscores the harsh policy dilemmas facing Russia as it simultaneously grapples with rising double-digit inflation and an economy in the throes of its deepest slump since 2009.
It said in a statement that inflation and inflation expectations had been showing a clear upward trend and that the depreciated rouble would continue to put pressure on prices in the next few months.
The bank predicted that oil prices would remain around $50 per barrel for at least the next three years, and saw annual gross domestic product returning to growth only in 2017.
It forecast GDP would decline by 3.9-4.4 percent in 2015 and by 0.5-1 percent in 2016, revising down previous forecasts.
"Overall external conditions remain unfavourable and while taking this decision today we considered increased external risks and based (decision on) micro economic forecast which suggests low pace of the world growth and volatility on the markets. Also oil prices will in the nearest time fluctuate around 50 US dollars per barrel," said Nabiullina.
Analysts had widely anticipated Friday's decision following a slide in the rouble over recent weeks that is adding to inflation, and expectations the U.S. Federal Reserve will raise its own rates, perhaps as early as next week.
The bank's worries about inflation have become more pronounced since the last meeting in July, when it played down inflation risks.
This time it said the weaker rouble would continue to put upward pressure on prices for several months, revising up its end-year inflation target to 12-13 percent from 10.8 percent previously.
Inflation was running at 15.8 percent on Sept. 7, unchanged from August and up from 15.6 percent in July, the bank said.
However, it also said inflation was expected to slow considerably in early 2016, falling to about 7 percent by September 2016.
The expected fall means that the central bank continued to hold out the prospect of more rate cuts once inflation is on a downward trend again.
However, the bank's guidance on the future direction of rates remained cautious, sticking to language which leaves its options open to move rates up or down or leave them on hold.
"The Bank of Russia will make decisions on its key rate based on the changing balance of inflation risks and the risks of economy cooling," it said in its rates statement. - Copyright Holder: REUTERS
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