A rate cut is required to support the Russian economy following the simultaneous collapse of external and internal demand, in the opinion of economists at Rabobank. USD/RUB is trading at 76.9455.
Key quotes
“The outlook for the Russian economy is rather bleak. The IMF anticipates a 5.5% contraction in Russia this year.”
“Unless USD/RUB revisits the all-time high at 85.9573 set in January 2016 in the coming days, the CBR is likely to pull the trigger on Friday.”
“We anticipate at least a 75bps cut to 5.25% to compensate for the lack of action last month. While a 50bps move would be in line with the consensus expectation, the CBR should act far more decisively and opt for a larger cut to send a very clear signal that it intends to do whatever it takes to prevent a prolonged recession from transforming into a depression.”
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