The second board meeting in less than three weeks comes after the Economy Ministry said March 21 that gross domestic product expanded 0.1% from a year earlier in February. The ministry projects inflation will end March at 7.2% from a year earlier. The statistics service is scheduled to publish the data April 4-5.
The central bank wants to keep inflation at 5% to 6% this year, a range it was forced to abandon last year.
“The fact that the central bank is holding its rates meeting before the publication of the inflation data sends the signal that it’s not so important,” said Vladimir Osakovskiy, chief economist for Russia at Bank of America Merrill Lynch in Moscow. “As soon as inflation starts to slow -- and that will be clear in April or May -- the central bank will start to cut rates.”
The central bank is convening earlier in April than previously this year, when it held meetings near mid-month. The decision prompted Alfa Bank, Russia’s largest non-state lender, to predict the regulator would move forward a quarter-point rate cut, chief economist Natalia Orlova said in a note to clients April 27.
The earlier date was selected because of the need for a quorum as some board members will be traveling abroad later in the month, Shvetsov told reporters today.
“The chances for a rate cut are probably not as high as the market thought, given the comments from Shvetsov this morning,” Vladimir Kolychev, head of research at Societe Generale SA’s OAO Rosbank unit in Moscow, said in a phone interview. “Now it really feels as if they’re trying to push back.” A cut now, while “much needed given the state of the economy, will be seen by most of the market and households as the central bank giving up to the government.”