OREANDA-NEWS. Russia's central bank will cut its key policy rate when it meets to discuss interest rates on Friday, a Reuters poll of analysts predicted.

This week's consensus marks a turnaround from the end of February, when most expected the bank to hold its main rate at 15 percent.

Several analysts have changed their forecasts in response to a steadier currency market, worries about slumping economic activity, and signs the central bank is more confident inflation is under control.

"The central bank has few arguments for not cutting rates. Devaluation and inflation expectations are stabilising, but risks for the economy are strengthening," ING economist Dmitry Polevoy said.

Out of 21 analysts polled by Reuters this week, 14 expected a cut on Friday. Of those, 11 expected a one-percentage-point cut to 14 percent, with three expecting a more aggressive cut.

Most analysts were surprised when the bank cut rates by two points at the end of January, but many now accept the logic and see it as a clue to the bank's future moves.

"Since then the rouble has remained stable, which is an argument in favour of a further loosening of monetary policy," said Sberbank CIB economist Vladimir Pantyushin.

The January cut had followed an emergency 6-1/2 point hike in mid-December, prompted by a panic run on the rouble which took the Russian currency's value as low as 80 against the dollar. It has since recovered to around 62.

Analysts predicting a rate cut also cited data for January showing the economy is sliding into recession.

They were less concerned about inflation, even though that rose to a 13-year high of 16.7 percent in February, seeing this as a one-off spike that would be reversed once the effect of higher import prices worked through.

Several analysts also interpreted comments by the central bank's new head of monetary policy Dmitry Tulin to Reuters last week as dovish.

Tulin said that while fighting inflation was the bank's priority, it could not neglect the economy, and there were signs that inflation expectations are falling.

However, a sizeable minority continues to believe that the bank will hold rates - a case possibly strengthened by a renewed bout of rouble weakness this week.

"We still think that easing in March would be premature, given remaining inflationary risks," Merill Lynch analysts said in a note.