Russian rates to fall with inflation-cbank chairman

MOSCOW Thu Jan 31, 2013 4:51am EST

MOSCOW Jan 31 (Reuters) - The chairman of Russia's central bank told President Vladimir Putin on Thursday he expected interest rates to fall in line with inflation in the coming years, rebuffing political pressure to ease policy now to boost flagging growth.

The comments by Sergei Ignatyev followed Putin's earlier remark that a rise in interest rates to levels well above inflation would hit the flow of credit to the economy.

Ignatyev, who retires in June after 11 years at the helm of the Bank of Russia, said that if the government upholds fiscal discipline it would be possible to reduce inflation to 4 percent or less in the next few years, from over 6 percent now.

"At the same time, interest rates will fall, perhaps not straight away, perhaps with a delay. But, as inflation falls, interest rates will fall," Ignatyev said in broadcast remarks at a cabinet strategy meeting chaired by Putin in the Kremlin.

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