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 expected to be raised by 500bps to 35% given that inflation is still running above 60%.
- In addition to tightening via the key rate, the central bank will likely continue to tweak the rules and regulations around FX tools and KKM accounts to manage financial conditions.
- Of the sell-side estimates we have previewed in this document, most are expecting a 500bp policy rate increase though downside risks are noted by some.
See the full preview, with a summary of sell-side analyst views, here:
In September, the CBRT delivered a 500bp increase to the one-week repo rates amid firm sell-side consensus for another large-scale increase following the above-estimate 750bp hike in August. The central bank said in its policy statement that monetary tightening will continue to be gradually strengthened to the extent necessary until a significant improvement in the inflation outlook is achieved. They cited both the stickiness of services inflation and rising oil prices as upside risks to inflation – and therefore see inflation close to the upper end of their forecast by year-end.
Since then, CPI has jumped a further 4.75% M/M in September, with the yearly figure crossing at 61.53% compared to 58.94% the month prior. Rising energy and food prices continue to be the main drivers, while core inflation rose from 64.85% Y/Y to 68.93%. Though the previous large-scale rate increases are expected to moderate demand-side price pressures, its effects will be felt with a lag and therefore inflation is likely to bias higher in the near term, with the CBRT now expecting inflation to reach the upper end of its forecast at 62.0%, and its most recent Market Participants Survey showing year-end inflation expectations at 68.01%.
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.