The Central Bank of Russia (CBR) has announced an emergency monetary policy meeting for today. Economists at ING expect Russia to slash rates again. However, this move is not set to drag the rouble down for the moment, but USD/RUB is forecast at 75 by end-2022.
Russia to cut rates further today
“We look for a 200-300bp CBR rate cut today to take the base rate to 11-12%. This large cut should be aided by signs that inflation expectations are falling and in an effort to soften what Dmitry thinks will be a 10-15% fall in Russian GDP this year.”
“As to the rouble, we think USD/RUB will be ending the year around 75 as the partial or potential total EU embargo on Russian oil hits in 2H22, while at the same time Russian resident demand for FX and imports start to stabilise. Before then, however, and because USD/RUB is mainly being driven by Russian commercial flows, the large rate cut may not send the rouble too much lower in the near-term.”
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