* Central bank holds rate at 7.75 pct, as expected
* Bank says inflation peaked, on track to slow
* Interest rate cut possible in Q2-Q3 - central bank
* Next rate-setting meeting on June 14 (Adds detail, analyst comments)
By Gabrielle Tétrault-Farber and Andrey Ostroukh
MOSCOW, April 26 (Reuters) - Russia’s central bank held its key interest rate at 7.75 percent on Friday in line with market expectations, but said it could consider cutting rates as early as June given that inflation has peaked.
The central bank’s decision to hold rates for a third consecutive board meeting this year was widely expected and has not prompted a visible market reaction, but it confirmed analysts’ view that the key rate will be cut later this year.
The central bank said inflation, the main economic indicator it tracks, has passed a peak of 5.3 percent in March and will now slow, reaching its 4 percent target in the first half of 2020.
Short-term “proinflationary risks” have abated, the central bank said, indicating that slowing inflation should provide room for lower rates.
“If the situation develops in line with the baseline forecast, the Bank of Russia admits the possibility of turning to cutting the key rate in Q2-Q3 2019,” the bank said in a statement, triggering debate among economic experts.
The central bank statement suggests it will consider cutting the key rate in June, but the final decision should depend on Russia’s economic performance in April and May, said Natalia Orlova, chief economist at Alfa Bank in Moscow.
A Capital Economics research note said it now expects the central bank to lower the key rate to 7.50 percent in June.
“The regulator deems it possible to ease monetary policy already this summer, which looks more optimistic than market expectations,” said Vladimir Evstifeev, head of research at Zenit Bank.
The central bank said, however, that it saw risks stemming from unanchored inflation expectations, as well as external factors, such as geopolitical factors, the oil market and the monetary policy of other central banks.
Dmitry Polevoy, chief economist at Russian Direct Investment Fund, said the central bank was now likely to cut the rate in June or July, and then again in September.
ING Bank said a September cut “feels more appropriate.”
The rouble showed a muted reaction to the rate decision, which was considered as interim because it was not followed by a news conference by Elvira Nabiullina, governor of the central bank.
The next rate-setting meeting on June 14 will be followed by a news conference at which Nabiullina will shed more light on the central bank’s monetary policy. (Additional reporting by Elena Fabrichnaya and Vladimir Abramov; Editing by Toby Chopra)