By Jason Bush and Oksana Kobzeva
MOSCOW, Sept 13 (Reuters) - Russia's central bank on Friday announced a major overhaul of its monetary policy framework to simplify its interest-rate toolkit, while resisting pressure to cut policy rates to boost the sluggish economy.
In a move to strengthen the influence of policy rates over market rates, the central bank said that it was making its one-week auction repo rate, presently 5.5 percent, its main policy rate from Sept. 16.
Previously the one-day repo rate, also currently at 5.5 percent, was seen as the bank's de facto key policy rate, although the rates on a range of central bank operations were also treated as policy rates.
In a statement, the central bank said: 'These changes will increase monetary policy transparency and improve its understanding by economic agents.'
The interest rate shake-up reflects new central bank chief Elvira Nabiullina's push for more efficient transmission of monetary policy to an economy struggling with high credit costs. She was due to holds a news conference shortly.
Economists welcomed the development as a significant step towards a more credible inflation-targeting regime, in which the central bank relies mainly on interest rates rather than the rouble's exchange rate to manage the economy.
'The main thing they're trying to do is to tie market rates to policy rates. So far the link is very weak,' said Clemens Grafe, chief Russia economist at Goldman Sachs.
'Ultimately it's not the policy rate that affects the economy, it's the market rate. And if the market rate is not linked to the policy rate, it's not really clear what you do when you move the policy rate.'
The rouble strengthened slightly after the decision, which many analysts interpret as a sign that the central bank is unlikely to cut interest rates in the near future.
'A reduction in rates is hardly likely until the end of the year,' said Natalia Orlova, economist at Alfa Bank. 'The central bank will wait for the moment when inflation has fallen to 6 percent.'
Inflation, at 6.3 percent as of Sept. 9, was still above the 5-6 percent official target, but the central bank's statement highlighted a lack of demand pressures, a widening output gap and a good harvest as exerting downward pressures.
Following the government's announcement this week that it would freeze regulated prices for utilities and transportation next year, the central bank said it expected inflation to continue to fall next year.
An announcement of new auctions for three-month funds would also reinforce the central bank's push to bring market rates closer to policy ones, economists said.
The minimum spread over the key policy rate on the auction of floating-rate funds will be 25 basis points.
The central bank left its present policy rates on hold, with the one-day auction repo rate at 5.5 percent, the overnight deposit rate at 4.5 percent and the fixed one-day repo rate at 6.5 percent.
It cut its overnight rate for loans against non-marketable collateral to 6.5 percent from 8.25 percent. This rate has now become completely divorced from the bank's refinancing rate, which is now even more symbolic.
The central bank raised its one-week deposit rate to 5.5 percent, bringing it into line with the one-week auction repo rate.
(Additional reporting by Lidia Kelly and Maya Dyakina; Editing by Douglas Busvine/Ruth Pitchford) Keywords: RUSSIA RATES/
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