CBR Preview: Chances are slightly tilted in favour of a rate cut – Nordea

The Central Bank of Russia (CBR) will make its key rate decision on 24 April, per Nordea. EUR/RUB and USD/RUB are trading at 80.3704 and 74.2209, respectively.

Key quotes

“Inflation started to accelerate in March and may climb to around 3% by the end of April. It is still below the 4% target though, but it is likely to exceed it in Q3. Still medium-term inflation risks look moderate given the very sharp drop in consumer demand.”

“The RUB appreciation since early April reduces potential upside pressure on the imported goods prices. This essentially gives room for monetary easing at a time when the economy is sliding into a recession amid the lockdown and extremely low oil prices.”

“We believe that chances are slightly skewed in favour of -25 bp in April accompanied with a dovish signal. A more sizeable cut of 50 bp may come at June 19 meeting once m/m inflation in seasonally adjusted terms shows more signs of stabilization.”