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MOSCOW, Nov 11 (Reuters) – Russia will stick to soft monetary policy in 2021 to help the economy recover as inflation is not expected to exceed the 4% target next year, Central Bank Governor Elvira Nabiullina said on Wednesday.
The central bank slashed its key interest rate to a record low of 4.25% this year in an attempt to mitigate an economic contraction driven by a drop in prices for oil, Russia’s key export, and the COVID-19 pandemic.
The central bank still sees room for monetary easing, Nabiullina told members of the lower house of parliament.
“However, we should really carefully weigh when this room is feasible to utilize, taking into account elevated uncertainty of the 2021 forecast,” Nabiullina said. “The monetary policy will remain soft in 2021,” she added.
The central bank is looking at various scenarios for 2021 regarding the pandemic, the global economy and oil prices.
A Reuters poll of market experts in late October showed the central bank was expected to hold the key rate unchanged at its next board meeting on Dec. 18, before trimming it to 4% in 2021.
Nabiullina said the rate cuts of 2020 were already helping economic activity to recover, although gross domestic product is expected to fall 4-5% this year, with the economy expected to recover to pre-crisis levels in the first half of 2022.
(Reporting by Andrey Ostroukh, Gabrielle Tétrault-Farber and Elena Fabrichnaya; Writing by Alexander Marrow and Andrey Ostroukh; Editing by Andrew Heavens)
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