* Russian cenbank to meet on rates on Sept. 18
* Cbank will study “necessity of rate cut”
* Cbank says rate may fall below 4% if needed for inflation
* Cbank updates economic scenarios
* Cbank to start publishing key rate trajectory (Adds quotes, detail, central bank forecasts)
By Andrey Ostroukh and Elena Fabrichnaya
MOSCOW, Sept 10 (Reuters) – The Russian central bank considers further cuts to its interest rates possible and does not rule out a rate below 4%, but the coronavirus pandemic makes such decision more complicated, Deputy Central Bank Governor Alexei Zabotkin said on Thursday.
The central bank slashed rates to record lows this year to support an economy battered by a drop in prices for oil, Russia’s key exports, and lockdowns related to the new coronavirus outbreak.
Speaking ahead of a rate-setting meeting due on Sept. 18, Zabotkin reiterated the central bank’s earlier line that “it will keep on studying the necessity of a rate cut,” which will depend on incoming data, including on the economy and inflation. The COVID-19, however, adds “noise” to the data, he said.
“We will be able to keep inflation near the target by the end of next year, but in the first half of next year there will be a period of lower prices,” Zabotkin told an economic forum.
Zabotkin said the central bank could cut its key interest rate below 4% if that is needed to boost consumer inflation back to its 4% target. Russia’s annual inflation stood at 3.6% in August.
The central bank, which will soon embark on a week of silence before next Friday’s board meeting, also published a report on its monetary policy, expanding the number of scenarios that it takes into account.
The level of uncertainty now is higher than usual, which prompts the central bank to pursue a policy prone to various forecasts, Central Bank First Deputy Governor Kseniya Yudayeva told the same conference on Thursday.
The central bank pegged new scenarios to Russia’s and global economic performance but not to oil prices, as was the case before.
In its base scenario, the monetary policy will remain accommodative in 2021 and the key rate will return to the 5-6% range in the future as the economy and inflation stabilise.
In its risk, or worst-case, scenario for 2021, the bank sees inflation accelerating to 5.5-6.5% and gross domestic product growth close to zero, accompanied by a drop in crude prices to $25 per barrel despite the OPEC+ deal to curb global output.
The central bank also said it will start publishing the trajectory of possible changes to its key interest rate as part of its macroeconomic forecast to increase the transparency of its monetary policy, a development much awaited by the market. (Reporting by Andrey Ostroukh and Elena Fabrichnaya Editing by Steve Orlofsky)
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