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Analysts at Nordea Markets expect the Central Bank of Russia to leave its key rate unchanged at 6.25% at its meeting next Friday but maintained their forecast of one more rate cut in the first half of the year.

Key Quotes:

“The Central Bank of Russia (CBR) will hold its first key rate meeting in 2020 next Friday. We believe that the CBR will take a break and leave its key rate unchanged at 6.25% after a very rapid easing (-150bp) in the second half of last year. A pause is needed to evaluate the inflation reaction to cuts already made.”

“The wait-and-see mode now seems even more justified given increased uncertainty over the future budget policy after the government reshuffle, and a bit weaker RUB amid intensified volatility on the global financial markets.”

“However, inflation pressures remain subdued, leaving the door open for another rate cut some time later in the first half of the year, especially if time shows that inflation responsiveness to earlier cuts is not too strong.”