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.
Executive summary:
- The Russian central bank is expected to keep the key policy rate unchanged at 7.5%
- Inflationary risks remain skewed to the upside despite CPI remaining below the CBR’s 4% target on the back of a notable drop in March on base effects.
- The Board are expected to maintain their relatively hawkish stance on policy having said that rates are more likely to be raised than cut this year.
In April, the central bank stated that while inflation trends have moderated and are generally in line with their forecast, risks remain skewed toward pro-inflationary ones and have remained essentially the same as in March. Since then, inflation has continued to decline to +2.31% y/y in April from +3.51% y/y in March, though that decrease was expected and largely on the back of base effects. A weak RUB, which has lost 9.3% of its value against USD YTD, as well as a surge in fiscal spending pose upward risks to inflation in the coming months.
Governor Nabiuliina offered the following guidance in her post-decision presser: “At our next meetings, we will continue to assess whether it is reasonable to raise the key rate in order to stabilise inflation at the target of close to 4% in 2024 and further on.” Moreover, the Bank released updated macroeconomic forecasts, with the key rate seen between 7.3-8.2% for this year and between 6.5-7.5% in 2024. While sell-side analysts expect a rate hike later in the year, they do not expect that hike to come as soon as this meeting.
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.