Russia c.bank could cut by 100 basis points this year

Central bank first deputy chairman Alexei Ulyukayev talks to Reuters in Moscow, September 11, 2009.

MOSCOW (Reuters) - Russia's central bank could in theory reduce its benchmark interest rate by a further 100 basis points before the end of the year, first deputy chairman Alexei Ulyukayev told Reuters on Friday.

Russia has already cut the refinancing rate by a total of 225 basis points since April to 10.75 percent as it seeks to help the economy out of its first recession in a decade.

"There is a theoretical possibility to lower rates by another 1 percentage point by the end of the year," Ulyukayev said in an interview at the Reuters Russia Investment Summit.

Analysts polled by Reuters expect at least another 50 basis points in cuts this year <ECILT/RU>.

Russia's central bank does not pre-announce the dates of its board meetings and rate decisions, but investors have been on tenterhooks for another cut since Ulyukayev said in the middle of August a move could be expected "any day."

Expectations of an imminent cut intensified last week, when data showed inflation at a 4-year low in August.

"Inflation in September (will be) around zero, possibly a bit more," Ulyukayev said. "For the year as a whole we will manage 11.6 percent, with some leeway."

He also said that the central bank had no plans to change the current composition of the 0.55 dollars and 0.45 euros basket which it uses to manage the rouble rate.

"The make up of the bi-currency basket suits us," he said.

(Writing by Toni Vorobyova)