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Russia Central Bank
Russia Central Bank
Executive Summary
- The CBR is likely to raise its key rate by +100bps to 9.50% in response to broadening inflation pressures in January resulting from increased FX passthrough via RUB weakness.
- A strong case can also be made for smaller +75bp hike to re-establish real policy rates should the MPC deem its suspension of FX sales as sufficient counter to passthrough effects.
- Attention will be on upside revisions to inflation forecasts and any potential softening in forward guidance as the CBR approaches the end of its tightening cycle.
- Although inflation expectations moderated to 13.7% y/y in Jan, the CBR will be reluctant to be seen as underdelivering on policy with geopolitical risks to the RUB still in play.
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The CBR is likely to raise its key rate by 100bps to 9.50% as the bank continues to respond to broadening inflation pressures resulting from increased FX passthrough. Although inflation expectations moderated to 13.7% y/y in Jan, the CBR will be reluctant to be seen as underdelivering on policy with geopolitical risks to the RUB still in play. Nevertheless, risks are skewed to the downside in the event that the MPC deems the suspension of FX sales to be a sufficient counter to passthrough effects - potentially resulting in a smaller +75bps hike.
MNI London Bureau | +44 020-3983-7894 | murray.nichol@marketnews.com
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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