Russia: CBR cut rates by 25bp on expected lines - BBH

The Central Bank of Russia cut rates 25 bp to 7.5%, as expected and it noted that the easing cycle might be completed in 2018, explains the research team at BBH.  

Key Quotes

“Markets are pricing in a year-end policy rate of 6.75%, followed by another 25 bp cut to 6.5% by mid-2019.  Price pressures are low, with CPI inflation decelerating to a lower than expected 2.2% y/y in January from 2.5% in December.  This is an all-time low and moves further below the 4% target.  PPI inflation has been accelerating (cycle high 8.4% y/y in December), however, and suggests price pressures will rise later this year.  With CPI inflation likely to pick up in H2, the central bank should front-load its easing in H1.”