30 Apr 2015
CBR could cut 100 bp in June – TDS
FXStreet (Edinburgh) - In the view of Paul Fage, Senior EM Strategist at TD Securities, it is probable that the Russian central bank cut its benchmark by 100 bp at the June meeting.
Key Quotes
“Today, the CBR cut its key rate by 150 bps to 12.5%. We had expected, in line with the consensus, a cut of just 100 bps. However, we saw the risks to our forecast as clearly in the direction of the CBR cutting more than 100 bps, and indeed 15 out of the 40 economists in the Bloomberg survey expected more than 100 bps”.
“As of 27 April, the CBR estimate that CPI inflation was running at 16.5% Y/Y, down from 16.9% in March. Moreover, looking at shorter-term measures of inflation, it is clear that inflationary pressures have subsided substantially from the peak earlier in the year”.
“Recent actions and comments suggest that the CBR and the government are not unhappy with USDRUB around current levels or maybe a bit higher. We think that in the near-term USDRUB volatility will subside and it will trade in a 50-55 range. A significant move up or down in the oil price and/or a resumption of large scale fighting in East Ukraine, would cause USDRUB to break out of our forecast range”.
“Assuming that USDRUB stays around current levels or moves lower, we think that the CBR will continue to cut the key rate. We expect another 100 bps cut at the June Board meeting”.
Key Quotes
“Today, the CBR cut its key rate by 150 bps to 12.5%. We had expected, in line with the consensus, a cut of just 100 bps. However, we saw the risks to our forecast as clearly in the direction of the CBR cutting more than 100 bps, and indeed 15 out of the 40 economists in the Bloomberg survey expected more than 100 bps”.
“As of 27 April, the CBR estimate that CPI inflation was running at 16.5% Y/Y, down from 16.9% in March. Moreover, looking at shorter-term measures of inflation, it is clear that inflationary pressures have subsided substantially from the peak earlier in the year”.
“Recent actions and comments suggest that the CBR and the government are not unhappy with USDRUB around current levels or maybe a bit higher. We think that in the near-term USDRUB volatility will subside and it will trade in a 50-55 range. A significant move up or down in the oil price and/or a resumption of large scale fighting in East Ukraine, would cause USDRUB to break out of our forecast range”.
“Assuming that USDRUB stays around current levels or moves lower, we think that the CBR will continue to cut the key rate. We expect another 100 bps cut at the June Board meeting”.