December 23, 2019 / 3:33 PM / a month ago

Russian central bank sees more pronounced impact of rate cuts on inflation

FILE PHOTO: People walk past the Central Bank headquarters in Moscow, Russia February 11, 2019. REUTERS/Maxim Shemetov/File Photo

MOSCOW (Reuters) - The Russian central bank said on Monday that the impact of its earlier rate cuts on consumer inflation could be more pronounced in future than previously thought, promising to keep a close watch on state spending designed to boost economic growth.

The bank lowered its key interest rate for the fifth time this year in December amid slowing inflation, saying that further rate reductions in the first half of 2020 looked possible but not imminent.

On Monday, the central bank said it planned to complete by early 2022 foreign currency purchases that it had to temporarily postpone in 2018 amid increased rouble volatility fueled by U.S. sanctions.

The bank also said in a monetary policy report that its base scenario envisaged that the U.S. Federal Reserve keeps its rates unchanged until 2022, while the European Central Bank is seen making one rate cut in 2020.

Reporting by Elena Fabrichnaya; Editing by Giles Elgood; Writing by Andrey Ostroukh

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