CBR will smoothly reduce rate when inflation stabilizes - monetary policy dept head

ST. PETERSBURG. Nov 14 (Interfax) - The Central Bank of Russia will smoothly adjust monetary policy when inflation stabilizes in order to avoid a sharp deviation between supply and demand, CBR monetary policy department head Andrei Gangan told journalists.

"Clearly, we won't instantaneously reduce the key rate [when inflation and inflation expectations allow the bank to move towards loosening monetary policy]. The forecast for the growth in demand, including potential demand related to the use of savings that citizens have built up, will also be taken into account so that it is commensurate with the capabilities of supply that we will have at that moment. We will smoothly adjust the trajectory of the key rate so that the potential growth in demand corresponds, as before, to the capabilities of supply," he said.

This measure will make it possible to avoid a repeat of the current situation where demand does not match capabilities to produce goods and services, he said.

As reported, the Central Bank raised the key rate in October by 200 basis points to 21%. The CBR board of directors is leaving open the possibility of an additional hike in the rate at its next meeting in December, Deputy Central Bank Governor Alexei Zabotkin previously said. However, such a decision is not predetermined and it will be taken based on the information the bank receives, he said.