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CBR – Hiking Cycle Comes Ahead of Schedule

RUSSIA
  • CBR elects to hike rates +25bp amid spiralling domestic inflation
  • Key component in the rate hike seems to be the stronger than expected recovery of demand side factors, coupled with higher pro-inflationary and lower disinflationary drivers – Despite the expectation for a peak in inflation post-March.
  • Second round effects from higher expectations, elevated volatility in global markets and supply-chain disruptions also part of the decision.
  • However, still see inflation pulling closer towards 4%, but this seems to be a lower conviction call than the prior Feb statement outlining 3.7%-4.2% in 2021.
  • Hawkish guidance towards another hike in the April/June meeting accentuates the CBR's concerns about the current trajectory of price pressures.
  • From there they will likely reassess the inflation trajectory to see if a remaining 25bp is warranted to continue to reinforce the disinflationary trajectory.
MNI London Bureau | +44 020-3983-7894 | murray.nichol@marketnews.com
BulletEM BulletEmerging Market News
MNI London Bureau | +44 020-3983-7894 | murray.nichol@marketnews.com
BulletEM BulletEmerging Market News

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