23 Oct 2009 15:09

Central Bank may cut refinancing rate to under 9% in 2010

MOSCOW. Oct 23 (Interfax) - The Central Bank of Russia does not rule out a reduction in the refinancing rate to below 9% in 2010.

The refinancing rate could be lower than the current inflation rate and there is "nothing horrible" about that, it is "absolutely normal," Central Bank First Deputy Chairman Alexei Ulyukayev said at a conference on Friday.

"Given that we are saying inflation might be no higher than 9% next year, then accordingly the refinancing rate could at least drop to that level," he said.

Ulyukayev stressed that the refinancing rate correlated to the expected rate of inflation and could be lower than the current rate.

Inflation in 2010 is forecast at 9%-10%, which is a generally cautious estimate, he added.

"We have all the chances and possibilities to be substantially below that forecast," he said.

Annualized inflation right now is 10.1%, he said.

"I believe that by year-end it will be less than 10%. We'll have single-digit inflation. That is much lower than the official forecast," he said.

Inflation in October will be close to zero, he added.