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:
- Further tightening from the CBRT is expected this week, with the benchmark one-week repo rate widely expected to be raised by 250bps to 45%.
- Though this may mark the final step in the central bank’s tightening cycle, recent central bank communication has signalled that interest rates are likely to remain elevated for a prolonged period of time given inflationary risks.
- Accordingly, sell-side analysts are expecting rates to be maintained at 45% until Q3 at the earliest, with some expecting no change for the remainder of the year.
See the full MNI Preview, with a summary of sell-side analyst views, here:
In December, the CBRT delivered a 250bp increase to the one-week repo rate to 42.5%. Key from the policy statement was the following paragraph: “Assessing that monetary tightness is significantly close to the level required to establish the disinflation course, the Committee reduced the pace of monetary tightening. The Committee anticipates to complete the tightening cycle as soon as possible.” The statement retained the following line from the November edition, maintaining a somewhat hawkish bias by signalling that rates will potentially stay higher for longer: “The monetary tightness will be maintained as long as needed to ensure sustained price stability”.
Given that the central bank have stated in its previous two policy statements that its tightening cycle is approaching completion, this week’s 250bp rate hike is likely to be the CBRT’s final rate hike of this cycle. A terminal rate of 45% would therefore mark 36.5ppts of tightening since the May elections. Among sell side, expectations are skewed toward easing beginning around Q4-2024, though some analysts forecast rates to remain on hold for the remainder of the year after the January 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.