The Central Bank of Russia (CBR) has cut the key rate following disappointing inflation data in January. Up to two more rate cuts are expected by analysts at Nordea. USD/RUB has soared to 64.2045, two-months high.
“CBR has cut the key rate for the 6th time in a row at today’s meeting in line with consensus. The rate is now at 6%, a level considered by the CBR as a lower bound of the neutral range of 6-7%. Further cuts will thus turn monetary policy from neutral to accommodative.”
“The key reason behind today’s rate cut is continued inflation slowdown. Inflation dropped to 2.4% y/y in January (considerably lower than 4% target). But even more importantly seasonally adjusted m/m inflation keeps decelerating and since April 2019 remains below levels corresponding to the 4% target.”
“The key rate going below 6% this year now looks certain and given that current inflation trends remain very moderate up to two more 25bp cuts look possible.”
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