Russian central bank sees room for rate cut -policymaker to Interfax

div classBodysc17zpet90 cdBBJodivpReuters – Russias central bank sees room for an interest rate cut as weekly inflation is slowing, Deputy Governor Alexei Zabotkin said on Thursday, Interfax new agency reported.p

pIt will present new economic forecasts to coincide with its next ratesetting meeting on April 29, TASS news agency quoted him as saying.pdivdivdiv classBodysc17zpet90 cdBBJodiv

pThe bank raised the key rate to 20 in an emergency move in late February before cutting it to 17 last week.p

pInflation in Russia could reach 1720 this year and the economy may contract by more than 10, its deepest fall since 1994, according to Alexei Kudrin, the head of Russias audit chamber and a former finance minister. p

pAfter the emergency rate hike, capital controls and other measures put in place by the central bank, weekly inflation fell to 0.66 in the latest week, having grown by an average of 2 since Moscow sent troops into Ukraine. p

p“The pace of price growth is still significantly higher than the inflation target but it is slowing down step by step,” Zabotkin said. “This gives us an opportunity to start gradually reducing the key rate.”p

pWeekly price growth of 0.1 equals the central banks annual inflation target of 4, Interfax quoted him as saying. The speed of future rate cuts will also be determined by the further normalisation of risks to financial stability, he added.p

pYear on year, inflation accelerated to 16.69 in March from 9.15 in February, and the central bank currently expects inflation will return to its target in 2024. p

pDuring the first days of what Moscow calls a “special military operation” in Ukraine, Russians withdrew billions from their accounts, in roubles as well as euros and dollars, before the central bank introduced its curbs. p

pOn one day, “nearly a yearly level of cash was withdrawn” from banks, central bank first deputy chairwoman Ksenia Yudayeva was quoted as saying by Interfax. p

pAccording to Zabotkin, the liquidity situation has stabilized and a significant part of the cash withdrawn has been returned to bank accounts. p

pThe central bank lost its ability to support the rouble after western sanctions froze nearly a half of its gold and forex reserves of 640 billion. Russia asked its exporting companies to sell 80 of their forex revenue on the market – a rule it is now preparing to ease. p

pAsked whether the central bank had forecast the freeze, a sensitive issue which put its leadership under the fire, Yudayeva said on Thursday: “What has happen was unprecedented… Everyone told us that such probability was very low.” p

pHer boss, Governor Elvira Nabiullina, was proposed by President Vladimir Putin to serve another term and parliament is set to vote for the proposal on April 20. p