Russian central bank says will take into account gasoline price rises in rate moves

Central Bank of Russia Considers Gasoline Price Surge in Rate Decisions

By Elena Fabrichnaya

SOCHI, Russia (Reuters) -Russia's central bank will take into account a spike in gasoline prices and its impact on people's inflationary expectations when making decisions on potential interest rate cuts, Governor Elvira Nabiullina said on Thursday.

Prices for gasoline, which are tightly monitored by authorities, are up 10.2%, above general inflation, since the start of the year, with the spike in part attributed to a step up in Ukrainian attacks on Russian refineries.

Reuters calculations in August showed that Ukrainian attacks and maintenance works reduced Russian oil refining by almost a fifth on certain days. Russia extended a ban on exports of gasoline to keep domestic prices under control.

Nabiullina said gasoline was one of the "marker" commodities that impact people's inflationary expectations, an important factor that the central bank's board reviews when making rate decisions.

"The rise in gasoline prices could slow down the decrease in inflation expectations. Unfortunately, they remain at an elevated level for now," Nabiullina said. The board will make its next key rate decision on October 24.

The central bank hiked interest rates to 21% last year, the highest level since the early 2000s, to fight inflation in an overheated economy. It has cut rates to 17% in several moves this year, saying that inflation is slowing.

Nabiullina said the spike in gasoline prices was a "one-off" event that would not have a sustained impact on overall inflation. She said that the central bank still had some room to lower rates further this year.

"Currently, the decisions for the remainder of the year are not predetermined. Everything will depend on the development of the economic situation," Nabiullina said.

(Reporting by Elena Fabrichnaya. Editing by Andrew Osborn and Mark Potter)