Russia’s central bank left key interest rates unchanged on Tuesday and said the current spread between lending and deposit rates was appropriate, suggesting it is still concerned a record slowdown in inflation may be temporary. A rate cut, however, is likely to be in the pipeline later this year as a more accommodative policy may be needed to boost lending, internal demand and economic growth as a whole. The central bank left the refinancing rate, or the cost of overnight loans from the central bank, at 8 per cent and the fixed one-day repo rate, the effective ceiling for interbank money market rates, at 6.25 per cent. The deposit rate, the key influence on borrowing costs at times of excessive liquidity, was also left unchanged at 4 per cent. The central bank said in an accompanying statement that real money market rates, which hover within the central bank’s corridor, are reasonable and had justified the decision. “The decision is made on the back of an assessment of inflationary risks and the economy’s growth prospects, given the continued uncertainty over developments in the external economic environment,” the bank said. The decision was widely expected by the market after policymakers signalled a month earlier they were satisfied with current rates. The rouble showed no immediate reaction, trading at 29.53 per dollar by 0905 GMT. The stock market retained early gains, with the dollar-based RTS index up 0.9 per cent and the MICEX rouble-traded index adding 0.4 per cent on the day. INFLATION Analysts expect the bank will ease monetary policy cautiously later this year to support the economy, with gross domestic product growth slowing to 3.9 per cent in January from 4.3 per cent in the whole of 2011. The PMI index showed growth in Russian manufacturing continued to slow in February, while growth in activity across service industries slowed from a six-month high. Inflation hit a new post-Soviet low of 3.7 per cent year-on-year in February, remaining well below the central bank’s full-year target of 5 to 6 per cent. But inflationary risks are not fully contained.