CBR sees room to ease monetary policy, pace will depend on macroeconomics
MOSCOW. June 1 (Interfax) - The Central Bank of Russia (CBR) sees room to ease its monetary policy, but the pace of easing will depend on many macroeconomic factors, including the dynamics of oil prices and inflation, Central Bank chief Elvira Nabiullina said in an interview with TV channel CNBC.
She said the CBR sees a trend toward slowing inflation in Russia, with annual inflation dropping to 4.1% in April from 5.4% in December 2016. The CBR intends to achieve its inflation target of 4% by the end of 2017.
"Right now we're very close to achieving the target for inflation, but it's very important for us that this not be a one-time achievement, but that inflation remains at the level of plus/minus 4% in the medium-term future," Nabiullina said.
She said a realistic interest rate with inflation of 4% could be 6.5%-6.75%, but the CBR's key rate is now higher than this, at 9.25%, due to persistently high inflation expectations. "They are not anchored, they are higher than our target for inflation. Therefore, we are trying to maintain the firmness of our policy in order to achieve the target in the medium term," Nabiullina said.
The CBR sees certain inflation risks related to oil prices, she said. "Right now they are fairly high, but the dynamic of oil prices is quite unpredictable," Nabiullina said.
"I think we should be conservative in our monetary policy. We are lowering interest rates and I think that we have room for a further easing of policy, but the pace of easing will depend on the situation in the economy, actual inflation, inflation expectations and the dynamic of oil prices," Nabiullina said.
The CBR analyses all these factors at every meeting of the board of directors on the interest rate and makes a decision, she said.
The next CBR board meeting on monetary policy will be held on June 16. At its two previous meetings, the CBR lowered the key rate by 0.25 and 0.5 percentage points, respectively.