CBR Statement Drives Home Hawkish Message, Door Left Open To More Hikes

CBR Statement Analysis

• CBR raises rates +100bp to 8.50%, leaving the door open to future hikes in the upcoming meetings - in line with our expectations.
• Overall, the statement sounded more hawkish than in October with phraseology tweaks regarding the balance of risks to inflation being “tilted markedly to the upside” and a sustained deviation from the 4% target becoming more urgent. The CBR only sees coming to 4-4.5% by late 2022 (in line with expectations).
• The CBR also alluded to intensified CPI pressures from the labour market, demand/supply imbalances and tightening monetary conditions - but categorized the latter as mostly neutral. Higher OFZ yields were also reflective of elevated geopolitical risks.
• Focus now shifts to Nabiullina’s presser for guidance on the Bank’s next steps in Feb. Concerns over elevated expectations are reflected in the bank leaving the door open to another hike in Feb in order to assess the path of inflation over the period as more favourable base effects enter the fray.