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RUSSIA: Expected Increase in Inflation Likely to Support Case for Rate Hike

RUSSIA

Inflation data will cross shortly (17:00BST/19:00 local time), where the year-on-year figure is seen increasing from +8.30% in May to +8.65% in June. Prices are expected to rise 0.76% on a month-on-month basis (Prior: +0.74%).

  • CBR Deputy Governor Zobotkin suggested recently that the board would consider either keeping rates on hold or hiking by 100 or 200bps at its meeting on July 26. Minutes of the previous rate-setting meeting stated that “a decision may be made to increase the key rate, and significantly.” Governor Elvira Nabiullina has previously explained that a "considerable" rate increase is one of more than one percentage point.
  • Goldman Sachs expect inflation to be reported at +9.2% y/y. They note that while inflation momentum had been increasing already in recent months, the unusually sharp increase expected this month is due to the adjustment of utility prices which could add up to 0.5ppt to year-on-year inflation because utility prices were not adjusted upward a year ago.
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Inflation data will cross shortly (17:00BST/19:00 local time), where the year-on-year figure is seen increasing from +8.30% in May to +8.65% in June. Prices are expected to rise 0.76% on a month-on-month basis (Prior: +0.74%).

  • CBR Deputy Governor Zobotkin suggested recently that the board would consider either keeping rates on hold or hiking by 100 or 200bps at its meeting on July 26. Minutes of the previous rate-setting meeting stated that “a decision may be made to increase the key rate, and significantly.” Governor Elvira Nabiullina has previously explained that a "considerable" rate increase is one of more than one percentage point.
  • Goldman Sachs expect inflation to be reported at +9.2% y/y. They note that while inflation momentum had been increasing already in recent months, the unusually sharp increase expected this month is due to the adjustment of utility prices which could add up to 0.5ppt to year-on-year inflation because utility prices were not adjusted upward a year ago.