Russia: CBR likely to cut its Key Rate by 25bps - TDS

Analysts at TDS expect the CBR to cut its Key Rate by 25bps to 7.50% at today’s Board meeting and is in line with the consensus with just two out of thirty-nine respondents to the Bloomberg survey expecting no change and four expecting a 50bps cut.

Key Quotes

“Last week, Governor Nabiullina said that the shift from the tight monetary policy to a neutral one might be “slightly faster” than planned as high oil prices have reduced the risks of ruble. January CPI inflation data released last Wednesday surprised to the downside, coming in at 2.2% Y/Y, down from the prior 2.5%; core inflation was running even lower at 1.9% Y/Y.”

“We think the good inflation data has increased the chances of a 50bps cut, but on balance, given the surprise 50bps cut last December, we still expect 25bps. Indeed Nabiullina did say that the CBR would consider holding rates today as well as cuts, although we think that odds of no change are low.”