Russia: CBR may still cut by 25bp - ING

Dmitry Polevoy, Chief Economist at ING, suggests that CBR may still cut rates by 25bp today, given no material change in overall growth/inflation risks balances, even though the consensus has recently switched from a “25bp cut” to “on-hold”.

Key Quotes

“Everybody was turning bullish on CBR rate cuts after the Jun-17 meeting. But the consensus has once again proved its fragility, shifting from a “25bp cut” to “on-hold” over a week. The US sanctions story look as the major reason, but it hasn’t changed much since Jun-17, and the RUB/OFZs do not flag any stark changes in investors’ view that the sanctions are unlikely to be a game-changer. Other risks mentioned in Jun-17 do not look much different, and the widely-cited threat of food prices may be exaggerated in light of the improving weekly CPI. So, we stick to our initial call of a 25bp cut at today’s meeting.”