Russia's central bank held interest rates steady at 11 percent on Friday, in line with expectations, although it signaled that if inflation kept on falling it would cut soon.
The bank said in a statement that while it "sees the positive processes of inflation slowdown and inflation expectations decline, as well as shifts in the economy which anticipate the beginning of its recovery growth. At the same time, inflation risks remain elevated."
It said that these risks primarily stem from slowly declining inflation expectations against the target, uncertainty in parameters of the national budget, and ambiguity of the observed movements in nominal wages.
"Moving forward, should inflation risks fall as much as to ensure with greater certainty that the Bank of Russia achieves its inflation target, the Bank of Russia will resume a gradual lowering of its key rate at one of its forthcoming Board meetings," the central bank said in a statement.
"The Bank of Russia predicts, consistent with the decision, the annual inflation to stand at about 5 percent in April 2017, to reach the 4 percent target in late 2017."
The bank was widely expected to hold interest rates at 11 percent but analysts said ahead of the decision that in the next few months the bank could start to cut rates.
Last month, the bank held rates steady, warning that inflation risks remained "high" and that the then oil price rise could be "unsustainable." However, the decision came at a time of renewed hope for Russia's beleaguered economy and the country's oil industry with commodity prices showing tentative signs of recovery.