Russian central bank cuts key rate to 16% as Putin speaks

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Key rate cut is in line with expectations

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Inflation expected below 6% in 2025, hit target in 2027

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Putin says he did not interfere in bank's decision

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Phone-in shows some Russians question inflation figures

(Adds Nabiullina comments in paragraphs 5-6)

By Elena Fabrichnaya and Gleb Bryanski

MOSCOW, Dec 19 (Reuters) - The Russian central bank cut its key rate by 50 basis points to 16% on Friday, in line with analysts' expectations, as inflation slows down and the economy, focused on military action in ?Ukraine, struggles to grow.

The central bank made the announcement as President Vladimir Putin was giving a press conference where he said the economic slowdown was the result of monetary tightening by the ?central bank to bring down the inflation rate.

"Underlying measures of current price growth declined in November. However, inflation expectations have edged up ?in recent months," the central bank said in a statement.

It said that after an expected spike ?in inflation at the start of 2026, ?due to an increase in taxes, the inflation rate would continue to fall to hit the target of 4% in 2027. The bank said "geopolitical factors" remained an uncertainty.

Central bank ?governor Elvira Nabiullina said it was too early to declare victory over inflation, ?adding that any marathon runner knows the second half of the race is harder than the first.

"One month of low inflation is not enough," she said. The Russian rouble, which has been buoyed by high interest rates ?and shrinking imports this year, strengthened by 0.8% against the U.S. dollar and ?by 0.5% against ?China's yuan on Friday.

PUTIN SAID CENTRAL BANK OPERATING 'QUITE RESPONSIBLY'

Most analysts in a Reuters poll had expected the central bank to cut the key rate by 50 basis points to 16%, but some had been reviewing their forecasts in favour ?of a bigger cut in light of Putin's phone-in event.

"For the market, this decision is negative, many were hoping for a larger move," said economist Evgeny Kogan. Economists and business leaders argue that a rate of 12% or 13% is needed to boost economic growth from the current 1%.

The central bank's board meeting, which was planned long in advance, took place during the annual phone-in by coincidence. Reacting to the rate announcement Putin said he did not interfere in the decision-making process.

"The central bank operates independently. I try not to interfere in the decisions ?it makes, ?and I try to shield it from any outside influence and pressure. Overall, the central bank is not only coping, it is acting quite responsibly," Putin said.

MANY RUSSIANS DO NOT TRUST FIGURES, PHONE-IN HOSTS SAY

Putin predicted that inflation may fall ?to 5.6% in 2025 from 9.5% last year. The central bank estimated inflation at 5.8% as of December 15. However, the phone-in hosts said questions from people indicated that many Russians did not trust the numbers.

They quoted a question from Maxim Volkov from Samara region, who said that his 50,000 roubles ($621) monthly salary was not enough to feed his family with three children. Volkov said the price of poultry meat had grown two-fold this year.

The hosts also quoted a message from a child in the southern Rostov region, whose name was not given, as asking: "Why are prices for food and buns in the ?cafeteria going up, but my parents' salaries aren't?"

Putin said inflation data showed average figures while prices for some foods could grow faster.

"It depends on the food basket a person consumes. If this food basket consists mainly of protein products like meat, chicken meat, then of course this affects the family budget. And there is certainly nothing good about that," ?Putin said. ($1 = 80.5000 roubles) (Additional reporting by Vladimir Soldatkin, Anton Kolodyazhnyy, Darya Korsunskaya, Anastasia Lyrchikova, Writing by Gleb Bryanski, Editing by Timothy Heritage and Alison Williams)