The Russian Central bank has left its key interest rate on hold at 11 per cent and warned that it may keep rates higher than it had previously indicated for a longer period of time.

Economists had forecast the bank to hold fire.

In a statement, the central bank said:

The risks remain that inflation may exceed the target in late 2017. These relate to a further worsening in the oil market developments; persistent elevated inflation expectations; the global food price performance; changed rates of indexation of regulated prices, wages and pensions, as well as the uncertainty around a balanced federal budget over the medium term. To enable the accomplishment of inflation targets, the Bank of Russia may conduct its moderately tight monetary policy for a more prolonged time than previously planned.

So, higher for longer, but still a small shift from January, when the central bank said it could not “cannot rule out a tightening of its monetary policy.”

It’s assuming that oil prices will average at $30 per barrel this year, with a gradual rise to $40 per barrel towards 2018 and says the recent pick-up in oil prices “may prove to be unsustainable.”

After the announcement, the Russian ruble strengthened 0.7 per cent against the dollar to Rub67.97 to the dollar.

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