CBR Preview: Easing getting out of steam – Nordea


Tatiana Evdokimova, analyst at Nordea Markets, expects the Central Bank of Russia to leave its key rate unchanged at 6.5% next week.

Key Quotes

“The Central Bank of Russia (CBR) will hold its key rate meeting next Friday. We believe that the CBR will take a break and leave the key rate unchanged at 6.5% after a very rapid easing (-125bp) in the second half of this year. The communication may also turn from easing to wait-and-see mode.”

“The signals that were given to the market this week in the statements from the CBR Governor and other members of the board of directors didn’t give any indication of further easing at the upcoming meeting. The declarations about no urgency as to the need to revise the neutral rate (currently estimated at 6-7%) also signal that the CBR may soon become less dovish.”

“Data received since the October meeting when the CBR opted for an aggressive cut of 50bp mostly show that economic trends are in line with the CBR forecast.”

We still see room for the key rate to go to 6% next year, but the pace of cuts is likely to slow down.”

The upcoming meeting will be accompanied by a press conference. We expect a lot of focus on the aggressive 50bp rate cut in October and a discussion of the neutral rate range.”

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