MOSCOW—Russia's central bank left its major policy rates unchanged Monday and said current rate levels would be appropriate for coming months, but warned of growing inflation risks in the medium term.
The Bank of Russia left the refinancing rate at 8%, while the overnight deposit rate stayed at 4% and the overnight auction-based repurchase rate was left at 5.25%.
While inflation has fallen on an annual basis, that trend "is only temporary," the central bank said in a statement on its web site. "Mid-term inflation risks are strengthening amid hikes in many regulated prices and utility tariffs set for June."
Russia delayed annual hikes in utility prices that usually take place in January until midyear, a move analysts called an attempt to garner public support for Vladimir Putin ahead of the March 4 presidential elections.
Inflation stood at 3.7% in March. Core inflation, which excludes items that face volatile price movements such as energy, fell to 5.5%, the central bank said.
The central bank's chairman, Sergei Ignatyev, warned last week that keeping inflation below the central bank's target of 6% would be difficult, while saying the regulator will keep a close eye on signs that the economy may be overheating. Unemployment fell to 5.8% in February, its lowest levels since the peak of Russia's oil boom in 2008.
The central bank also said it would set its one-week auction deposit rate at 4.75% starting April 10, a move that will help the regulator reduce volatility in money-market rates as it increases the use of monetary policy to combat inflation.
Some analysts said the regulator was focusing too much on inflation, while ignoring risks to growth. The economy ministry last week cut its economic growth forecast for 2012 to 3.4%, from a previous outlook of 3.7%.
"The economy ministry has already recognized that Russia will be facing strengthening headwinds in the second half," said Ivan Tchakarov, chief economist at Renaissance Capital. "In our view, the central bank is too complacent about risks to growth and is overemphasizing risks to inflation."
The central bank will next meet on rates in the first half of May, it said.