Russia's central bank on Tuesday kept its policy interest rate unchanged for the fifth successive month, citing above-target inflation and slowing growth. The decision was in line with economists' forecast. The bank also cautioned that inflation is expected to remain above its target in the first half of 2013.

The Bank of Russia maintained its refinancing rate at 8.25 percent as inflation pressures outweighed concerns over the flagging growth. The bank also retained its one-week repurchase rate, which is used to provide banks with cash, at 5.5 percent and the overnight deposit rate at 4.5 percent.

Russia's annual inflation increased to 7.1 percent in January form 6.6 percent in December, and substantially exceeded the upper bound of the target range. The increase in inflation was mainly driven by higher growth rates of food and passenger transport services prices, while the non-food goods inflation remained moderate.

The bank forecast that the rate of inflation would stay above the target range during the first half of 2013. It noted that taking into account still relatively high bank lending growth rates, the risks of a significant economic slowdown stemming from the tighter monetary conditions are minor.

RTTNews