MNI CBR Review - February 2022: CBR Sounds Alarm On Overheating Risks

Executive Summary

• The CBR raised its Key Rate +100bps to 9.50% (in line with consensus), signalling more potential hikes in the pipeline for 2022 (additional +50-100bp expected).
• Nabiullina warned against overheating risks, citing supply/demand imbalances and labour shortages as key constraints keeping the CPI trajectory “appreciably” above forecast.
• The MPC considered 100-150bp in hikes at this meeting, while revising its inflation outlook and average policy rate ranges higher
• The CBR will maintain a data-dependent approach going forward, but higher FX passthrough on resurgent geopolitical risks may offset favourable Feb base effects in CPI

Full Review Here:

CBR Review 14.02.22.pdf

The CBR delivered a notably hawkish meeting on Friday with visible concern regarding overheating and inflationary risks reflected in the statement and even more so in Nabiullina’s presser, which shone a light on the MPC’s consideration of 100-150bp in hikes at the meeting. As expected, the CBR delivered a 100bp hike, but guided far more hawkishly than was priced in by the market in a decisive signal aimed at further anchoring still elevated inflation expectations.