MOSCOW: The Russian central bank left its main lending rate on hold as expected on Friday, for now putting concerns about stubbornly high inflation before worries about a slumping economy.
The bank left the rate unchanged at 11 percent, following five successive cuts this year that have reduced the rate by six percentage points after an emergency hike to 17 percent last December.
It said in a statement that inflation and inflation expectations had been showing a clear upward trend and that the depreciated rouble would continue to put pressure on prices in the next few months.
Analysts had widely predicted Friday's hold decision following a slide in the rouble over recent weeks that threatens to reignite inflation.
The central bank said that as of Sept. 7 inflation was running at 15.8 percent, unchanged from August and up from 15.6 percent in July.
"The ruble's depreciation caused prices for a wide range of goods and services to accelerate, which was the reason for elevated inflation expectations, along with the July indexation of utility tariffs," the bank said.
However, it also said that inflation was expected to slow considerably in the early part of 2016, falling to about 7 percent by September 2016.
The bank said that weak domestic demand and relatively tough monetary conditions would hamper consumer price growth. It predicted that the economy would contract by 3.9-4.4 percent in 2015.
It predicted that the oil price would linger around $50 per barrel for the next three years, leading to a more protracted decline in quarterly GDP than previously expected.
"Moving forward, the bank of Russia will make decisions on its key rate based on the changing balance of inflation risks and the risks of economy cooling," it said.
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