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Russia to hold extraordinary rate-setting meeting as inflation eases


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A file photo of a general view showing the Central Bank headquarters in Moscow January 30, 2015.
A file photo of a general view showing the Central Bank headquarters in Moscow January 30, 2015.

- Russia's central bank will hold an extraordinary meeting on Thursday to consider the level of its key interest rate, the bank said on Wednesday, as inflationary expectations fall and a rising rouble holds down price growth.

The central bank has slashed interest rates twice, each time by 300 basis points, to 14% since an emergency rise in late February to 20%.

Recent inflation data allows it to cut further to support the sanctions-hit economy, analysts say.

The central bank, which has its next scheduled rate-setting meeting set for June 10, will publish the key rate statement at 0730 GMT on Thursday after the extraordinary meeting. It did not provide further details in its statement on Wednesday.

"We expect a cut at least as far as 12%," Evgeniy Suvorov, an economist at CentroCreditBank, said on his Telegram channel MMI.

Russian weekly inflation was down to 0.05% in the week to May 13, easing from 0.12% a week earlier and well below the 2.22% hit in early March. That slowed annual inflation to 17.69%, which, however, remains at its highest levels in nearly two decades. 

The Russian rouble has recently strengthened to levels not seen since early 2018, driven by capital controls imposed in late February to shield Russia's financial sector after Moscow's decision to send tens of thousands of troops into Ukraine prompted unprecedented Western sanctions. 

The firming rouble, along with a decline in recently elevated consumer demand, are the main factors behind a slowdown in inflation, the Russian central bank has said, and officials predict year-end inflation not exceeding 15%. 

Earlier on Wednesday, the bank said that inflationary expectations among households had fallen to 11.5% in May from 12.5% in April, a factor giving it more reasons to cut interest rates further to boost Russia's shrinking economy with cheaper lending. 

 

(Reporting by Reuters)

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