As expected, the Central Bank? on Friday left all its policy rates on hold for the second month in a row and adopted a less hawkish tone on inflation, suggesting that it may stay its hand in subsequent months.
In a statement accompanying its decision, the bank? was more optimistic about inflation trends than it had been in previous months, which analysts interpreted as a signal that future hikes in rates are less likely.
"The overall message from the statement is that [the Central Bank] is still focused mostly on inflation rather than growth," said Dmitry Polevoy, an economist at ING. "But we also read this as a less hawkish position than in previous months."
Central Bank First Deputy Chairman? Alexei Ulyukayev? said in separate remarks that inflation may be between 6.5 and 6.7 percent this year, a more optimistic outlook than the forecast of about 7 percent given in a Central Bank strategy document this week.
"The small increase in interest rates in September made it possible to hold back inflation expectations and create a better picture for the control of inflation in future months," Ulyukayev said.
The Central Bank kept the fixed one-day repo rate, a de facto ceiling for the money market, at 6.5 percent and the overnight deposit rate, a floor for interbank rates, at 4.25 percent.
The refinancing rate, the cost of overnight loans from the Central Bank, was held at 8.25 percent.
The ruble showed little immediate reaction to the bank's widely anticipated decision, but it has been weakening slightly amid diminished global risk appetite.
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