20 Jan 2011 19:34

Central Bank unlikely to raise rates in Jan - VTB Capital economist

MOSCOW. Jan 20 (Interfax) - The Central Bank of Russia will most likely raise interest rates by a quarter point two times in the first quarter of 2011, but probably not in January, the chief economist at VTB Capital, Alexei Moiseev, said.

It is possible the refinancing rate will be left unchanged, while only "working" interest rates are raised.

It will be especially important to look at the inflation rate in April, he said.

If the weekly inflation rate in that period is 0.3%, then the Central Bank might raise rates by another 150 basis points, he said, adding the VTB Capital has assigned that scenario a probability of 10%-15%. The basic scenario is for the weekly inflation rate to decline to 0.1% by the end of April from 0.2%. "That would be a positive signal," Moiseev said. "It would be alarming to have double-digit inflation in annual terms. Most likely, we will be close to that level in January-February this year, with annualized inflation in the range 9.8%-10.2%. But if it's 10.8%-11%, that would be cause for concern. I repeat, that is not our basic scenario," he said.