USD/RUB: Magnitude of CBR rate cut unlikely to have much effect on the pair – Commerzbank

At today's policy meeting, the Russian central bank is expected to reduce its policy rate from 11% to 10%. The USD/RUB pair is unlikely to react to such a move, economists at Commerzbank report.

CBR set to cut rate at regular meeting

“Today brings the next scheduled meeting of CBR, at which markets widely the base rate to be cut once again. For some weeks, a 100bp cut had been widely discounted.”

“Since Russia’s inflation rate dropped from c.20% to c.17% in May, and the rouble resumed its appreciation streak in recent days, some expectations of 150bp or 200bp cut have also crept in. Nevertheless, 100bp still is an overwhelming favourite – perhaps because CBR is viewed as an ultra-cautious central bank.”

“We doubt that the magnitude of a rate cut today will have much effect on the (now rather exotic) USD/RUB exchange rate.”