Russia: CBR likely to cut rates by 25bps - TDS
|In view of analysts at TDS, today’s CBR rate decision is a close call, but the good underlying inflation performance with the low core rate tips the balance, in their view, for a 25bps cut.
Key Quotes
“At the June Board meeting the policy rate was cut by 25bps to 9.0% with the press statement saying that the CBR sees room for cutting the key rate in H2. Although June CPI inflation moved up to 4.4% Y/Y from a prior 4.1%, this was almost entirely driven by food prices; core inflation fell to the historically low level of 3.5% in June. The ruble has shown some weakness since the June meeting, falling 3% against USD in spite of a rise in oil prices. This weakness is, at least in part, due to the prospect of increased US sanctions, which might make the CBR worry about further RUB weakness, although we think they will have limited impact.”
“Consumer inflation expectations still remain high (10.3% in June) and the CBR might be concerned that a very visible rise in food prices could temporarily stop or even reverse the downward trend in expectations. However, the good underlying inflation performance with the low core rate tips the balance, in our view, for a 25bps cut. The Bloomberg consensus is for no change, but with 13/35 respondents expecting, like us, a 25bps cut.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.