Russia c.bank keeps rates on hold

MOSCOW: Russia's Central Bank held its key policy rates on Thursday, meeting market expectations for the first time this year, and saying that current levels would balance growth and inflation risks in the coming months.

The announcement came after the forex market closed for the day, but the market had already priced in broad expectations of the central bank leaving key policy rates on hold this month.

The rouble and bond prices are unlikely to move much on Friday on the decision.

Following are analysts' comments on the decision:

VLADIMIR OSAKOVSKY, ECONOMIST AT UNICREDIT

"Given the fact that inflation has started to slow down, the central bank is losing one of the main reasons to tighten monetary policy. The economy is far from overheating, it needs to be supported."

MAXIM ORESHKIN, CHIEF RUSSIA ECONOMIST AT CREDIT AGRICOLE

"The central bank has signalled that the rates will be on hold will the end of the summer, which is in line with our expectations. We expect a monetary policy tightening round to start only in September.

We think that current rates levels remain low leading to fast import growth, a rise in lending, decrease in unemployment and acceleration of basic inflation."

NATALIA ORLOVA, CHIEF ECONOMIST AT ALFA BANK

"The decision was expected I have a feeling that in coming months the focus will shift to support the economic growth path, which means we can speak about rates stabilisation. I think the situation is likely to be that rates will be unchanged in August and September."

ALEXANDRA EVTIFYEVA, ANALYST WITH VTB CAPITAL

"We saw all the same in the last statement inflation has stabilised, the risks for economy growth remain. The only window they left is a decrease in savings activity. It seems they will not change rates in the summer and will wait to see how big the crops are, what the credit growth is. There will be no market reaction as the decision was expected."

SANNA KURRONEN, ANALYST WITH DANSKE BANK

"It was quite in line with market expectations," said Sanna Kurronen, an analyst with Danske Bank in Copenhagen. "The central bank says the level is appropriate to balance inflation and growth risks but I don't know how much weight we can put on the central bank's comments because they have been quite contradictory in recent months."

On the central bank warning of possible decline in propensity to save: "I think that is something they definitely should be worrying about: savings are declining while lending is growing rapidly."

Copyright Reuters, 2011