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Hike 475bp In line With Expectations; Shift Funding Through 1w Repo

CBRT
  • As expected the CBRT delivers a 475bp hike in line with market expectations - taking the 1w repo rate to an even 15%
  • The full shift of funding through the 1w repo is another positive outcome that wasn't fully expected, bolstering policy orthodoxy as the CBRT moves away from unconventional measures - "The 1w repo will be the main policy tool and the only indicator for the monetary stance".
  • While a 475bp hike represents a symbolic step for CBRT credibility and investor confidence, it does not offer a tangible significant tightening, given that the effective funding rate had risen to 14.8% prior to the meeting - resulting in ~20bps of additional tightening.
  • With inflation expected to pick up beyond the 12% mark towards 13-14% and FX passthrough only comprising a portion of inflationary pressures, additional measures may be required to stabilise inflation over the medium-term
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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