* C.bank cuts rates less than analysts predicted
* Governor doesn’t rule out rate pause
* C.bank improves 2017 GDP forecast
* Stays bearish on oil outlook (Adds CBR governor, analyst, detail)
By Andrey Ostroukh and Alexander Winning
MOSCOW, June 16 (Reuters) - The Russian central bank cut its key interest rate by 25 basis points on Friday and pledged further cautious monetary policy easing this year against a slightly better economic outlook.
The central bank trimmed the key rate to 9.00 percent from 9.25 percent, in the third consecutive cut this year.
Presenting the decision, Central Bank of Russia Governor Elvira Nabiullina said annual inflation had neared its long-awaited goal of 4 percent as inflationary expectations among households had fallen to an all-time low in May.
“It is important to form trust among all economic agents in our capability to ensure that inflation stays close to the 4 percent target for a long time,” Nabiullina said, describing the rate decision as unanimous.
“That is why our approach to lowering the key rate will remain considered and cautious,” said Nabiullina, who for years has successfully shrugged off numerous calls from business leaders and policymakers for deeper rate cuts to kick-start the economy.
Analysts had been split between predicting a rate cut of 25 or 50 basis points: Fifteen out of 23 analysts and economists polled by Reuters this week said they expected the central bank to cut the key rate to 8.75 percent.
The rest saw a 25 basis point cut, however.
Nabiullina said she would not rule out putting the rate-cutting cycle on hold for more than one board meeting.
“Comments from the Russian central bank today appear to be aimed at dampening hopes that the pace of monetary easing might be stepped up,” analysts at Capital Economics said in a research note.
While the policy rate is likely to be cut in small steps, inflation at post-Soviet lows paves the way for a lengthy easing cycle, they said.
The central bank said in its statement it saw room for cutting the key rate in the second half of 2017.
By the end of the year, the central bank is expected to bring the key rate to 8-8.25 percent, according to a Reuters poll. The central bank’s monetary policy chief Igor Dmitriev told Reuters this month that market expectations about rate cuts generally matched the bank’s own view.
The central bank also said on Friday a possible tax manoeuvre by the government and a recovery in consumer demand carried upside risks for inflation, strengthening the case for prudent easing.
Lower interest rates could support an economic recovery by making lending cheaper, while also depriving the rouble of support from carry trade operations where investors borrow dollars cheaply and buy into high-yielding rouble assets.
The rouble firmed briefly to 57.6 versus the dollar after the rate decision before falling back to the level of 57.7 seen before the move.
Also on Friday, the central bank increased its economic growth forecast to 1.3-1.8 percent in 2017 from 1.0-1.5 percent growth predicted earlier. It also stuck to its forecast that prices for oil would average $50 per barrel this year, before sliding to $40 in the future.
The central bank’s next rate meeting, which will not be accompanied by a Nabiullina press conference, is scheduled for July 28.
Writing by Andrey Ostroukh