By Alexander Winning and Andrey Ostroukh
MOSCOW (Reuters) - Russia's central bank kept its key interest rate <RUCBIR=ECI> unchanged on Friday at 10 percent as expected and said it would not hurry rate cuts, as Governor Elvira Nabiullina stressed the bank's determination to rein in inflation.
An accompanying statement used relatively hawkish language and also replaced a previous reference to a possible rate cut in the first or second quarter of next year with indication that a rate cut is possible in the first half of 2017.
The central bank said the potential for rate cuts was limited in the near future, even though prices for oil, Russia's main export, have risen substantially since its last meeting.
Nabiullina later told a news conference that a cut was more likely in the second quarter of 2017 than the first.
"Taken at face value, that might suggest that a June rate cut is most likely," Capital Economics said in a note.
Even when rates go down, the central bank's policy will remain moderately tight, Nabiullina said.
"Our objective goes far beyond the simple task to deliver on the 4 percent inflation target in December 2017. We seek to ensure that inflation is subsequently maintained at this level," she said.
Consumer inflation in Russia slowed to 5.6 percent as of mid-December, and the central bank said it was on track to decline further to meet the target.
"The CBR's rhetoric remains singularly focused on keeping inflation expectations in check with a view to achieving the end-2017 inflation target," analysts at Citi said.
Though inflation is hitting post-Soviet lows, the central bank said on Friday it still saw risks inflation would miss its target, citing an unstable decline in inflation expectations.
The central bank also preferred to be cautious with its economic outlook.
In spite of a recent deal between OPEC and non-OPEC countries to cut oil output, the bank said it was sticking to its conservative assumptions that oil prices would average $40 per barrel over the next three years.
The central bank kept its 2016 gross domestic product forecast, saying the economy would contract by 0.5-0.7 percent, followed by growth of less than 1 percent in 2017.
The bank's next rate meeting is scheduled for Feb. 3.
Analysts polled by Reuters in late November expected the central bank to next cut the key rate in the first quarter of next year, bringing the rate to 8 percent by the end of 2017.
(Reporting by Andrey Ostroukh and Alexander Winning; Editing by Catherine Evans)