Tatiana Evdokimova, analyst at Nordea Markets, suggests that the CBR is likely to revise its inflation forecast down and shift its rhetoric to a slightly more dovish mode. Key Quotes “Since the December meeting when the CBR last updated its forecasts, the EM currency index has increased by 2.6%, oil prices have recovered by 12%, Russian CDS has dropped by 21 points while 10-year sovereign bond yields have stabilised 0.26% points lower. The external environment has substantially improved thanks to a much softer Fed, continued trade negotiations and lack of progress in sanctions tightening.” “Internal economic developments are also exceeding CBR’s baseline forecasts. Inflation response to the VAT hike remains moderate (with inflation at 5.2% y/y in February vs 5.5%-6% expected by the CBR for Q1). Inflation expectations seem to have peaked and are likely to gradually resume a downward movement in case of absence of new shocks. RUB appreciation (6.6% ytd, which is more than any other emerging currency) is also helping to keep inflation in check. Next week’s data about retail sales will be of particular importance to the CBR. January retail sales were weak (1.6% vs 2.9% in 2018) following the VAT hike. If this demand weakness persists for much longer, this will remain an important argument against further hikes.” “Given that external conditions have significantly changed and the initial VAT impact on prices is weak, the CBR will likely revise its inflation forecast down and shift its rhetoric to a slightly more dovish mode. However, we don’t expect any promises to resume the easing cycle before Q4 given the generally cautious approach of the CBR.” “While trade tensions remain unresolved, the CBR will probably keep a relatively cautious stance.” “We believe that the key rate will remain stable at 7.75% for two more quarters with easing likely restarting in Q4. Several factors could potentially accelerate a resumption of the easing cycle. Sustainably better external conditions thanks to a trade deal or a faster-than-expected decline in inflation expectations are among them. The upcoming meeting will be followed by the press-conference of the governor.” FX Street FX Street FXStreet is the leading independent portal dedicated to the Foreign Exchange (Forex) market. It was launched in 2000 and the portal has always been proud of their unyielding commitment to provide objective and unbiased information, to enable their users to take better and more confident decisions. View All Post By FX Street FXStreet News share Read Next USD/CHF rebounds from 10-day lows, trades near 1.0040 FX Street 4 years Tatiana Evdokimova, analyst at Nordea Markets, suggests that the CBR is likely to revise its inflation forecast down and shift its rhetoric to a slightly more dovish mode. Key Quotes "Since the December meeting when the CBR last updated its forecasts, the EM currency index has increased by 2.6%, oil prices have recovered by 12%, Russian CDS has dropped by 21 points while 10-year sovereign bond yields have stabilised 0.26% points lower. The external environment has substantially improved thanks to a much softer… Regulated Forex Brokers All Brokers Sponsored Brokers Broker Benefits Min Deposit Score Visit Broker 1 $100T&Cs Apply 0% Commission and No stamp DutyRegulated by US,UK & International StockCopy Successfull Traders 9.8 Visit Site FreeBets Reviews$100Your capital is at risk. 2 T&Cs Apply 9.8 Visit Site FreeBets Reviews$100Your capital is at risk. 3 Recommended Broker $100T&Cs Apply No deposit or withdrawal feesTrade major forex pairs such as EUR/USD with leverage up to 30:1 and tight spreads of 0.9 pips Low $100 minimum deposit to open a trading account 9 Visit Site FreeBets ReviewsYour capital is at risk. 4 T&Cs Apply Visit Site FreeBets ReviewsYour capital is at risk. 5 Recommended Broker $0T&Cs Apply Trade gold, silver, and platinum directly against major currenciesUp to 1:500 leverage for forex trading24/5 customer service by phone and email 9 Visit Site FreeBets ReviewsYour capital is at risk.
