MOSCOW: The Russian central bank is seen either holding its key interest rate on Friday or raising it marginally amid rising inflationary risks and its intention to resume foreign currency purchases from next month, a Reuters poll showed on Monday.
Fifteen analysts and economists polled by Reuters said they expected the central bank to keep the key rate at 7.50 percent this week. Twelve said a rate increase to 7.75 percent looked possible.
"The market remains fairly split between 25 basis points hike and unchanged policy rate. This is likely to be a close call until the very last moment," said Alexey Pogorelov, chief Russia economist at Credit Suisse in London.
Market expectations match the central bank's rhetoric. Governor Elvira Nabiullina said late last month that the board of directors will consider holding its key interest rate or raising it at the next board meeting on Dec. 14.
Even though the number of polled pundits expect the central bank to hold the key rate, the chances of a higher cost of borrowing and lending in Russia are rising, a move that could possibly help keep inflation under control.
Chances of a rate hike have increased as the rouble's weakening has started filtering into annual consumer inflation, which is set to overshoot the central bank 4 percent target in the next few weeks.
The central bank's pledge to resume purchases of foreign currency for the finance ministry's reserves can also boost inflation by putting extra pressure on the rouble. To lift this pressure, the central bank put such purchases on hold in late August.
The already-approved increase in value-added tax to 20 percent from 18 percent from next year is also set to raise inflation and add to rising inflationary expectations among households.
Despite the recent less-than-expected increase in inflation and a somewhat better rouble performance, "the pendulum has swung towards a rate increase by 25 basis points to 7.75 percent," said analysts at Rosbank, a subsidiary of Societe Generale.
The central bank is set to announce its rate decision at 1030 GMT on Friday, before Nabiullina sheds more light on the bank's actions and plans at a televised press briefing.
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