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 recent acceleration in inflation makes tightening a near certainty this month
- Analysts are relatively evenly split in forecasting a 25 or 50bps rate rise
- Even those that do see smaller 25bps hike also acknowledge the risk of a larger move.
The CBR are likely to opt for a larger rate hike of 50bps this month to face off a near-term inflation spike that's put price rises ahead of the bank's forecasts. Analysts are relatively evenly split in forecasting a 25 or 50bps rate rise, but even those that do see smaller 25bps hike also acknowledge the risk of a larger move.
The recent acceleration in inflation makes tightening a near certainty this month, with both headline and core CPI continuing to trend higher across September. Headline and core printed at 7.4% & 7.6% y/y respectively - topping the CBR's forecast for a cyclical peak at 6.9%. Both a 25bps and a 50bps rate hike would likely meet the CBR's pledge to take more standard steps on the policy rate as the bank awaits a moderation of CPI into the second half of next year.
It's likely that the terminal rate for this tightening cycle will remain at around 7.50% regardless of whether the CBR choose to tighten by 25 or 50bps this month, with markets looking to gauge whether the board will front-load rate rises to head off inflation, or extend a sequence of 25bps rate rises over a few more meetings. A larger initial rate hike may address latent credibility concerns, as the Bank appear more responsive to the uptick in CPI.
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.