Russian Central Bank's decision on key rate in Dec not set in stone, will depend on data - CBR deputy governor

MOSCOW. Nov 11 (Interfax) - The decision that the Central Bank of Russia reaches regarding the key rate at the meeting of the regulator's board of directors in December is not set in stone, and it depends on incoming data, Central Bank Deputy Governor Alexei Zabotkin told reporters.

"The board of directors allows for the possibility of additionally hiking the key rate at the next meeting. [The CBR provided this signal following the meeting in October]. However, I would like to note that even this signal does not predetermine the decision in December," Zabotkin said following a meeting of the United Russia political party with the Central Bank leadership.

"The decision in December will be based on the picture of the economy, economic activity, inflation, inflation expectations, lending dynamics, and external conditions that the board of directors should see in mid-December," Zabotkin said.

Zabotkin emphasized that October's data on inflation and growth in lending do not differ considerably from September's data.

"However, the information that we have been hearing from businesses, enterprises, and banks over the past couple of weeks indicates that we could well see a slowdown in lending activity in November and December. If actual data confirm the signals on a slowdown in demand for loans at the current rate level, then the board of directors would naturally reach its decision on December 20 based on the change in lending dynamics," he said.

In raising the key rate 200 basis points to 21% in October, the CBR gave a tough signal that the regulator holds open the possibility of raising the rate at its next meeting.

The rate change step depends on the overall level of the rate, and currently the minimum possible rate change is 1 percentage point, adviser to the CBR governor Kirill Tremasov told Interfax last week.

"The board of directors makes a decision on the rate based on what level of the rate it considers necessary for reducing inflation to the target level," Zabotkin said in response to a question as to whether there is a limit for changing the rate.