Good harvest may usher a Russian rate cut in September, VTB says

MOSCOW, March 26 (Reuters) - Russia's second-largest lender, VTB, expects the central bank to start cutting the key interest rate in September when data on this year's harvest is in, the bank's chief financial officer Dmitry Pyanov said.

The central bank kept the key rate on hold at its meeting on March 21, saying that inflationary pressure remains high, despite complaints from business leaders that high rates are stifling the economy.

Asked about the possibility of a rate cut, Pyanov said: "I am expecting it in September. You know that our inflation is food-oriented. There is a very high proportion of food products."

Russia's harvest this year suffered from the worst weather in years, forcing the government to introduce export curbs in order to contain domestic price growth and playing a role in annual inflation running at over 10%.

Pyanov said that harvest volumes in Russia-controlled territories of Ukraine, which already stand for about 5% of Russia's total grain output despite the military action, will have an impact on inflation.

Russia harvested around 130 million tons of grain in 2023, a 9% drop compared to the previous year.