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HIGHLIGHTS-Russian central bank governor speaks at press conference

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MOSCOW, July 24 (Reuters) - The Russian Central Bank Governor Elvira Nabiullina spoke at an online press conference after the central bank cut its key rate by 25 basis points to 4.25% on Friday.

Below are the highlights of her comments:

ON RATE DECISION

“We will consider the appropriateness of a further key rate cut at our future meetings... risks of inflation deviating from our target next year remain.”

“It is difficult to assess how quickly and widely the key rate cut will translate to economic and inflation dynamics.”

“We moved to a standard step in changing the rate by 25 basis points, given that more precise adjustment is needed. On the whole, there may still be room for monetary policy easing.”

ON NEUTRAL RATE RANGE

“We have revised our real neutral key rate range downwards to 1-2% from 2–3%. This means the nominal neutral interest rate range declines to 5–6%, taking into account the annual inflation target close to 4%.”

ON INFLATION

“Overall inflationary pressure is weakening, after the increase in March-April, which is evidenced by stable inflation indicators, adjusted for one-off factors.”

“The economy will be returning to its potential gradually, and therefore disinflationary trends will prevail.”

ON HEDGING OIL PRICES

“We have not yet seen accurate proposals on this topic, but if we are talking about us directly copying the Mexican experience, then we do not support such a proposal.”

“If we are talking about hedging all volumes, we have big doubts that hedging markets would allow this operation to happen or it will be very expensive. If the suggestion is to finance it from the National Wealth Fund (NWF), it is an expensive operation and not the best way, in my view, to spend money from the NWF.”

ON SANCTIONS

“We have already stopped assessing the likelihood of sanctions being introduced against Russia, this is a thankless task.”

“But we always try to be conservative when giving forecasts, when making decisions, and we understand that such risk can always exist.”

ON DEPOSITS

“For now we see no reason to change legislation to introduce negative rates on foreign currency deposits. We will of course see how the situation develops further. But we do not intend to pursue a policy of negative rates on rouble deposits.”

ON BANKS

“It is recommended that large banks look at what is happening with their balance sheets, assessing capital adequacy and assessing whether it is possible to pay dividends for 2019.”

“I do not rule out a number of banks suspending or lowering dividends for 2019.”

Compiled by Alexander Marrow, editing by Katya Golubkova

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