March 22, 2019 / 12:08 PM / 4 months ago

HIGHLIGHTS-Quotes from Russian central bank chief's news conference

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MOSCOW, March 22 (Reuters) - The following are highlights from Russian central bank chief Elvira Nabiullina’s news conference following the bank’s interest rate decision:

ON KEY RATE DECISION “Today, the board of directors.... took the decision to keep the key rate unchanged... There are grounds to believe that the decisions to increase the rate last year were enough.”

ON INFLATION “We expect to see year-end 2019 inflation at a lower rate - at between 4.7 percent to 5.2 percent. We had earlier forecasted 5.5 percent.”

“Monthly price increase rates are already slowing down. Annual inflation will peak in March-April... Value added tax (VAT) has added 0.6-0.7 percentage points to annual inflation.”

“The bulk of the VAT increase has already been priced in... We do not rule out that delayed effects of the VAT increase could appear in the coming months.”

ON INFLATIONARY EXPECTATIONS “The dynamics of inflationary expectations - from the population and business - showed last year that they (the expectations) remain unanchored... The increase in consumer demand does not create pressure on prices.”

“Deposit rates have slightly increased.... OFZ yields have come down which was due to improved conditions on global financial markets... Taking into account the factors I have talked about, we have lowered our year-end inflation forecast.”

ON GEOPOLITICAL RISKS “We should still evaluate external factors very carefully. Risks related to geopolitical factors remain high... In such conditions, investor mood can change quickly which will have an effect on OFZ yields and the currency rate.”

ON POSSIBLE RISKS TO FINANCIAL STABILITY “We may tap the OFZ market and buy OFZ - we have had such a tool for quite a long time... We do not think we will need to use that (tool), but we do not rule it out.”

“We may use other tools as well, in particular, to give our financial institutions time, allowing them to adapt to new conditions.”

ON OIL PRICES “We have adjusted the average oil price level for this year taking into account its actual dynamics at the start of the year... Our oil price forecast for 2020-2021 has not changed.”

ON ECONOMY “We maintain our view on economic growth... economic (growth) is close to its potential and its growth does not create additional inflationary pressure.”

“We maintain our GDP growth forecast for this year despite some adjustments in oil price level parametres... We expect that in the first half of the year, there could be some slowdown in the GDP growth rate.”

ON KEY RATE OUTLOOK “If the situation continues to develop according to our base scenario, it will give us an opportunity to consider switching to a key rate cut earlier than we forecasted in December 2018...”

“We do not exclude this may happen (a key rate cut) in 2019... We are not ready to provide more specific information about when it may happen.”

“At today’s board meeting, we were actually considering only one option - maintaining the key rate.”

ON NEUTRAL KEY RATE “As regards returning to a neutral key rate by 2020, yes, we believe this is possible. ... We estimate it is at 6-7 percent.”

ON SOVEREIGN EUROBOND PLACEMENT “This was truly a successful placement... But regarding (the possibility of) a placement in yuan - this is a question for the finance ministry.”

ON ROUBLE RATE “The rouble’s strengthening was driven by external markets, there was a revaluation in the trajectory of monetary policy by (some of the) largest countries, so risk-premiums for emerging market countries went down a bit... First of all, this is an effect of the milder rhetoric from the Fed and the ECB.” (Reporting by Andrey Ostroukh, Gabrielle Tétrault-Farber, Elena Fabrichnaya, Dmitry Antonov, Polina Nikolskaya and Darya Korsunskaya Writing by Katya Golubkova Editing by Tom Balmforth)

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