* Central bank holds rate at 7.75 pct, as expected
* Bank says inflation peaked, on track to slow
* Interest rate cut possible in Q2-Q3 - central bank
* Next rate-setting meeting on June 14 (Adds detail, analyst comments)By Gabrielle T?(C)trault-Farber and Andrey OstroukhMOSCOW, April 26 (Reuters) - Russia's central bank held itskey interest rate at 7.75 percent on Friday in line with marketexpectations, but said it could consider cutting rates as earlyas June given that inflation has peaked.The central bank's decision to hold rates for a thirdconsecutive board meeting this year was widely expected and hasnot prompted a visible market reaction, but it confirmedanalysts' view that the key rate will be cut later this year. The central bank said inflation, the main economic indicatorit tracks, has passed a peak of 5.3 percent in March and willnow slow, reaching its 4 percent target in the first half of2020.Short-term "proinflationary risks" have abated, the centralbank said, indicating that slowing inflation should provide roomfor lower rates."If the situation develops in line with the baselineforecast, the Bank of Russia admits the possibility of turningto cutting the key rate in Q2-Q3 2019," the bank said in astatement, triggering debate among economic experts.The central bank statement suggests it will consider cuttingthe key rate in June, but the final decision should depend onRussia's economic performance in April and May, said NataliaOrlova, chief economist at Alfa Bank in Moscow.A Capital Economics research note said it now expects thecentral bank to lower the key rate to 7.50 percent in June."The regulator deems it possible to ease monetary policyalready this summer, which looks more optimistic than marketexpectations," said Vladimir Evstifeev, head of research atZenit Bank.The central bank said, however, that it saw risks stemmingfrom unanchored inflation expectations, as well as externalfactors, such as geopolitical factors, the oil market and themonetary policy of other central banks.Dmitry Polevoy, chief economist at Russian Direct InvestmentFund, said the central bank was now likely to cut the rate inJune or July, and then again in September.
ING Bank said a September cut "feels more appropriate."The rouble showed a muted reaction to the rate decision,which was considered as interim because it was not followed by anews conference by Elvira Nabiullina, governor of the centralbank.
The next rate-setting meeting on June 14 will be followed bya news conference at which Nabiullina will shed more light onthe central bank's monetary policy. (Additional reporting by Elena Fabrichnaya and VladimirAbramov; Editing by Toby Chopra)
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