MOSCOW: Russia’s central bank unexpectedly accelerated its pace of monetary easing after price growth fell to a record and a deal between Opec and its allies to maintain oil production cuts until the end of 2018.

The one-week auction rate was lowered to 7.75 per cent from 8.25 per cent, according to a statement on Friday. All 33 analysts surveyed by Bloomberg predicted a decrease to 8 per cent. Governor Elvira Nabiullina will hold a news conference at 3pm in Moscow, followed by the release of updated economic forecasts.

The central bank said only “some” easing is possible in the first half of 2018, which “seems to be more hawkish” than its previous guidance, according to VTB Capital.

“The extension of the agreement to reduce oil production brings pro-inflationary risks down over a one-year horizon,” policymakers said in the statement. “Medium-term pro-inflationary risks still prevail over the risks of inflation’s sustainable deviation downward from the target.”

The central bank is shifting to neutral monetary policy after about two years of a stance deemed “moderately tight” brought Russia’s real rates to among the highest globally. While it’s already bracing for a pickup in price growth, and the threat of US sanctions lingers, rate setters surprised with faster easing in the face of a stumbling economy and inflation at the lowest since communism ended more than a quarter of a century ago.

After the pact with the Organisation of Petroleum Exporting Countries about a year ago, global inventories have fallen and crude prices rebounded. The deal was even beefed up recently through the inclusion of Nigeria and Libya, two Opec members originally exempted from the curbs.

Given the improved outlook for oil, the Bank of Russia said it’s raising its forecast for economic growth in 2018 from its previous baseline scenario. Gross domestic product will grow 1.7 per cent to 2.2 per cent this year, it estimates.

Although the unprecedented decline in annual price growth has brought it to 2.5 per cent in November, policymakers have attributed it to one-time factors such as a bumper harvest and a strong rouble. The central bank says inflation will return to its target of near 4 per cent next year.

The rouble briefly extended its declines after the rate announcement before paring losses and trading 0.2 per cent weaker at 58.89 against the dollar as of 2:52pm in Moscow.

For the first time in months, the central bank issued no guidance before the decision, with Nabiullina saying previously that the benchmark is likely to reach its nominal equilibrium level only in 2019 after following a “smooth and gradual” path.

“The decision is a bit inconsistent with the previous rhetoric,” said Ivan Tchakarov, an economist at Citigroup Inc. in Moscow. “The pace of rate cuts will slow significantly in 2018; the question is how much.”