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RUSSIA: JP Morgan Expect Key Rate to Be Lowered to 14% by End-2025

RUSSIA
CEEMEAEM BulletRussiaBulletEmerging Market News
  • Following the CBR’s rate decision earlier today, JP Morgan note that although the door for further hikes was left open, they sense that the October hike was the last one in this cycle and, unless fiscal policy or credit activity surprise significantly, the next step will be a cut.
  • Gauging the timing of the cut is not easy though. JPM suspect it will be aligned with first signs of meaningful softening in economic momentum, but the economy has so far proved surprisingly resilient to various shocks, including policy shocks.
  • JP Morgan's current forecast assumes the economy will stall by 2Q25 and this is when they expect the easing to commence. They believe the economy will be flirting with recession at mid-year and anticipate that the policy rate will be lowered to 14% by end-2025.
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  • Following the CBR’s rate decision earlier today, JP Morgan note that although the door for further hikes was left open, they sense that the October hike was the last one in this cycle and, unless fiscal policy or credit activity surprise significantly, the next step will be a cut.
  • Gauging the timing of the cut is not easy though. JPM suspect it will be aligned with first signs of meaningful softening in economic momentum, but the economy has so far proved surprisingly resilient to various shocks, including policy shocks.
  • JP Morgan's current forecast assumes the economy will stall by 2Q25 and this is when they expect the easing to commence. They believe the economy will be flirting with recession at mid-year and anticipate that the policy rate will be lowered to 14% by end-2025.