Nabiullina: Room for easing monetary policy will emerge only as pro-inflationary risks subside

MOSCOW. April 20 (Interfax) - Room for easing monetary policy will emerge only as pro-inflationary risks subside, according to Russian Central Bank Governor Elvira Nabiullina.

"In order for there to be room for further rate cuts, it is necessary that pro-inflationary risks subside," Nabiullina said in a text posted on the website of the Central Bank of Russia (CBR), though the CBR governor did not say these very words during her speech in the State Duma.

"The annual inflation rate dropped to 3.5% in March, and will drop again in April. However, the current price growth, the seasonally adjusted monthly growth, is close to 4%. Inflation expectations for both households and businesses are higher than they were in 2018-2019, when inflation was close to 4%. External conditions also remain complicated," Nabiullina said in the text of her speech.

By retaining the key rate at 7.5% per annum in March, the CBR has maintained a hawkish signal, meaning that if pro-inflationary risks rise, then the CBR intends to evaluate the advisability of hiking the key rate at the next meetings. The regulator in March also noted that the balance of risks had not changed substantially over the medium term, and that it was still leaning toward pro-inflationary risks.

The CBR's next meeting of the board of directors on monetary policy is scheduled for April 28. The meeting will be pivotal, meaning that in addition to a press release announcing the decision on the key rate, the CBR also plans to publish a medium-term macroeconomic forecast and hold a press conference with the regulator's governor. The monetary policy report will be released on May 11.