The Central Bank of Russia (CBR) at its March 18 board meeting kept the key interest unchanged at 11%, extending the pause in monetary easing and slightly moderating its hawkish stance on inflationary risks.

Despite a continuous disinflation trend and surprising inflation reports in February, rising oil prices, and a recovering ruble, the CBR had not been expected to cut the rate, limited by the hawkish stance taken previously in January.

18 out of 22 analysts surveyed by Reuters expected the rate to stay unchanged, with some analysts betting on a surprise 50bp rate cut. The CBR was broadly expected to soften its rhetoric and allow for a continuation of its monetary easing that was interrupted by the drop in oil prices in 2015.

However, the phrasing of the CBR press release also did not point to a possible cut in the key interest rate at the next meeting if inflationary pressures ease as expected. Instead, the regulator named oil price and fiscal risks, as well as uncertainty about the inflationary effect of the weaker ruble in the beginning of 2016 as main points of concern.

Despite acknowledging the drop inflation and recent rise in oil prices and ruble, the CBR noted that it will continue to pursue a "moderately tight monetary policy for a more prolonged time than previously planned".

Sberbank CIB commented on March 18 that the "press release displayed a more hawkish position than we had anticipated".

The investment arm of Russia's largest lender attributes this to the influence of the CBR's revised medium-term forecasts which are yet to released but are expected to be downgraded from the December version.

"The CBR clearly stated that it still sees risks to inflation coming from the fiscal side (including regulated tariff hikes, public wage and pension indexation), oil and food price trend reversals and stubbornly high inflation expectations," Sberbank CIB noted.

Lower inflation and possible ruble stability are not expected to affect the CBR's decision at its next meeting on April 29, although the regulator will continue to gradually soften its stance, the analysts wrote.