CBR: Better hawkish than Turkish scenario – Nordea Markets

Tatiana Evdokimova, Research Analyst at Nordea Markets, notes that the CBR decided to avoid Turkish scenario and hiked the key rate for the first time since 2014.

Key Quotes

“The RUB liked the decision but it's unlikely to be a start of a strengthening trend since tougher sanctions still pose high risks.”

“The phrase about bringing the key rate to the neutral level in 2019 has disappeared from the press-release and the CBR guided for more hikes ahead depending on external conditions.”

“The CBR decided to firmly demonstrate its commitment to inflation targeting avoiding potential Turkey-like scenarios.”

“Even though the consensus and our forecast showed no hike today, the money market was pricing-in a hike and the CBR decided not to disappoint the markets.”

“The inflation forecast was revised from above 4% to 5-5.5% in 2019, which is in line with our forecast.”

“With inflation expectations still unanchored the CBR is more inclined to be more hawkish.”

“The RUB has gained 1.5% vs USD after the decision and settled at strongest levels since early September as the market welcomed the CBR decisive action.”

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 securities. 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 Forex 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.