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Pullback Considered Corrective

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Holding Above Recent Lows

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BLOCK, Large 3Y Midcurve Put Condor

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  • Today's statement sounded incrementally more hawkish than the prior meeting with a few new inclusions:
  • Intensified pressure from the labour market highlighted, while phrasing on 'significantly proinflationary' risks and elevated expectations remained the same.
  • Disinflationary risks also noted as moderate.
  • Focus on a lower than expected household Marginal propensity to save is also more pronounced in this statement.
  • CPI in July also seen flat at 6.5% as of 19 July, but may have room to rise higher.
  • 2021 CPI was adjusted sharply higher to 5.5-6.2% from 4.7-5.2%, while growth has been revised higher to 4-4.5% vs 3-4% prior.
  • Additionally, a large revision to current account surplus to $88bn vs $55bn prior
  • This decision comes in line with the BBG consensus and that latter part of our base case scenario, with the CBR falling short of noting any easing in demand pressures in CPI or favourable base effects filtering through in the coming months
  • Markets will turn their focus to Nabiullina's presser at 1300BST for further guidance and tone RE the bank's next steps.