MOSCOW: Russia's central bank is unlikely to follow other emerging markets and raise interest rates to put a floor under its sliding currency - at least not for now, analysts say.
But they warn that if the rouble's depreciation goes on, leading either to a panic among ordinary people or to much higher inflation, the policy calculus could yet change.
This week, the Turkish and South African central banks have both raised rates - in Turkey's case dramatically - fuelling investor speculation about whether Russia might also be forced to take similar measures.
The rouble has lost 5 percent this year, the biggest plunge since the 2008-9 financial crisis, testing the central bank's resolve to complete a shift to inflation targeting, an approach that makes interest rates its most important tool.
Higher rates, making it more rewarding to hold money in rouble accounts or bonds, could be one way to persuade people to hold on to the Russian currency. Nevertheless, economists polled by Reuters this week predict that Russia would hold its key policy rate at 5.5 percent until the third quarter - and then cut, not hike.
"At the moment it's highly unlikely that they will raise interest rates," said Liza Ermolenko, emerging markets economist at Capital Economics in London. "If the rouble falls a lot further, if there is a further escalation in the emerging-market crisis, or if the oil price drops, this is a possibility. But it will take a much deeper fall in the rouble before the central bank will do that."
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