MOSCOW (Reuters) – Russia’s central bank on Friday said it would consider a wide range of options regarding its benchmark interest rate at its Oct. 27 meeting, a slight softening of the hawkish signal the bank has been giving in recent weeks.
The weakness of the rouble, which slumped to a more-than 18-month low this week, has forced the Bank of Russia into 550 basis points of rate hikes since July and analysts polled in late September widely expect another raise this month.
But the rouble was given a sharp boost this week when President Vladimir Putin ordered mandatory sales of foreign currency by some exporters. That led the currency to strengthen and potentially gives the central bank reason not to hike rates too drastically from the current 13%.
“We will assess the appropriateness of further rate hikes,” Deputy Governor Alexei Zabotkin said in an interview with the Interfax news agency. “I think that the range of alternatives that will be considered is quite wide.”
Asked by Interfax whether holding the rate was under consideration, or by which steps the bank could hike, Zabotkin said: “We will receive quite a lot of additional data, so now I would not single out specific alternatives.”
Zabotkin said inflation was closer to the upper end of its 6-7% expected range for 2023 and that it would only start coming down in spring-summer of next year. The bank targets an inflation rate of 4%.
The central bank has said it was doubtful of the capital control measures imposed by Putin. Zabotkin said that though the controls may smooth out short-term currency volatility, they could complicate foreign economic activity.
“Such measures in normal conditions are burdensome for business, and now they could potentially create additional risks: the continuity of import supplies, the speed of settlements and so on,” Zabotkin said.
(Reporting by Reuters; Writing by Alexander Marrow; Editing by Mark Trevelyan and Hugh Lawson)
