RUB: Now the next rate cut – Commerzbank

Russia’s central bank (CBR) issued a 100bp surprise rate cut at its last meeting in May, but it reiterated its hawkish message, hence it did not appear that the CB would continue to cut rates– Commerzbank, Commerzbank's FX analyst Tatha Ghose notes.

YoY inflation may reach the lower-end of CBR's forecast of 7%-8%

"Now, following a raft of softer monthly and weekly CPI data, and subsequent dovish remarks by CBR Governor Elvira Nabiullina at the 2025 St. Petersburg International Economic Forum, it seems clear that we should be anticipating the next rate cut already at the 25 July meeting. Russia’s seasonally-adjusted annualized inflation rate dropped to 4.5% in May from 6.2% in April (hence, already near the 4% inflation target)."

"Latest data imply that year-on-year inflation will easily reach the lower-end of CBR's forecast of 7%-8% for end-2025 – this forecast will be updated before the next meeting – such developments make a July rate cut much more likely. We do not anticipate noticeable impact on the artificial USD/RUB exchange rate."