Russia's central bank governor Elvira Nabiullina said she prefers cutting interest rates in small steps as the bank gradually eases monetary policy, adding that inflation expectations needed to be dampened further.
Nabiullina also said that neutral nominal interest rates would be at 6.5-6.75% given the central bank's inflation target of 4%.
The interest rate currently stands at 9.25%. It has come down from 10% in autumn of last year to 9.75% in March and then to 9.25% in April.
"The Bank of Russia prefers gradualism in its policy," she said. "It's better to move down by small steps than significantly cut down the rate and then due to an unexpected shock raise it back."
"Now, when inflation has already fallen significantly, the Bank of Russia still has to make sure that inflation will remain close to the target of 4 percent in the medium-term. In order to achieve this, we need to further dampen inflation expectations," Reuters cited Nabiullina as saying.
Nabiullina repeated that the central bank considered it possible to restart replenishing the country's forex reserves once it had met its 4 percent inflation target.
"We will purchase currency for reserves only if the market situation is stable and our operations don't affect the FX rate," Nabiullina said.