Russian central bank expected to leave unchanged on Friday

MOSCOW: Russia's central bank is expected to keep its main interest rate unchanged at this year's last board meeting on Friday, as inflation, its key responsibility, has exceeded the target following a slide in the rouble, a Reuters poll showed on Monday.

Twenty-nine of the 31 analysts and economists polled said the central bank would leave its key rate at 4.25pc, keeping the cost of lending at a record low since July.

The central bank started cutting rates early this year when the economy took a hit from a plunge in prices for oil, Russia's main export, and from the coronavirus pandemic and subsequent lockdowns that hit business activity.

The central bank has recently said it still saw some room for monetary easing, although it pointed to short-term risks of higher inflation, noting that inflationary expectations have also increased.

Contemplating a jump in inflation to 4.4pc in November from its 4pc target seen a month earlier, some experts have revised their forecasts in the past few weeks, pricing in an on-hold decision versus their earlier expectations for a 25-basis-point cut.

"The recent increase in food price inflation pushed headline CPI inflation above the 4.0pc target and the CBR's forecast, therefore ruling out any policy action in the next meeting," Credit Suisse's chief economist Alexei Pogorelov said.

The central bank has said inflation was driven more by temporary factors, predicting disinflationary risks to prevail later on in 2021.

"The accompanying statement will state there is no need in a rate reaction to the current temporary spike in inflation and will retain a theoretical possibility of a lower rate next year," said Dmitry Kulikov, an economist at ACRA rating agency.

The rate decision is due at 1030 GMT and will be followed by an online media conference with Governor Elvira Nabiullina.