Russian central bank holds interest rates

ANKARA

The Russian central bank held its key interest rate at 11 percent, the bank said in a statement on its website Friday.

"The bank decided to keep the key rate at 11 percent per annum, in recognition of growing inflation risks, while the risks of economic cooling remain," the statement said.

"On condition inflation risks recede, the Bank of Russia will continue with a downward revision of its key rate, to be decided at one of its forthcoming Board of Directors meetings," the statement said.

Analysts said the move was no surprise.

"This came as expected, and was a very defensive move by the central bank, taking no chances given the uncertain outlook for oil and inflation. It is still pretty dovish messaging," Timothy Ash, credit strategist with investment bank Nomura in London, said in a note emailed Friday. "Dovish messaging" suggests that the bank intends to keep interest rates at the current rate or lower for some time.

The bank noted that the annual rate of inflation was at 14.8 percent as of Dec. 7, down from 15.6 percent in October.

"However, the slowdown in consumer prices occurred somewhat slower than predicted. In addition, the inflation expectations of households escalated in November," the statement said.

The central bank is also concerned about the slow pace of growth.

"According to Rosstat's tentative estimates, the annual pace of GDP drop decreased in the third quarter. Having said this, the mixed dynamics seen in core macroeconomic indicators for October speak for the instability of this trend," the bank said.

Annual consumer price growth will stand at about 6 percent in late 2016, the bank forecast, on track to reach the bank's 4 percent target in 2017. The current tight monetary policy will help in reducing inflation, the statement said.

Should inflation decline, the bank will lower interest rates, according to the statement.