Central Bank of Russia preview: Inflation pressure is rising – Nordea Markets

Tatiana Evdokimova, research analyst at Nordea Markets, believes that a rate hike by CBR is marginally more likely in its last meeting this year next Friday on 14 December.

Key Quotes

“The two options on the table are to keep the key rate unchanged (at 7.5%) or to hike it by 25bp.”

“External conditions have worsened slightly since the previous CBR meeting in late October.”

“On their own these moderately higher external risks don’t merit a rate hike. However, the picture is complicated further by the planned return of the central bank to the FX market with regular FX purchases of around USD 5bn per month.”

“These operations were suspended in September and their resumption while external risks remain elevated could generate some negative reactions on the FX market. The CBR could opt for a key rate hike to partly offset this potential negative effect on the RUB.”

“Faced with rising inflationary pressures, the CBR is likely to show its commitment to the inflation target by tightening its monetary stance slightly.”

“The market is expecting a rate hike in the coming months but maybe not this time around.”


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