Russia: CBR to cut its Key Rate by 25bps to 8.25% - TDS

Analysts at TDS expect the CBR to cut its Key Rate by 25bps to 8.25%, which is in line with the consensus with only 9/41 respondents to the Bloomberg survey expecting a 50bps cut.

Key Quotes

“However, we think that the decision is not quite as clear cut as the survey might suggest, and that there is a 33% chance that the CBR cuts by 50bps. Since the September Board meeting, inflation data has been encouraging with headline and core CPI inflation falling to 3.0% Y/Y and 2.8% Y/Y respectively, comfortably below the 4% year-end target.”

“The main concern for the CBR is that consumer inflation expectations, although on a declining trend, remain high. Furthermore, the economy has been picking up, and the CBR thinks that it is now close to potential. We expect the CBR to keep slowly cutting rates, probably in 25bps increments, bringing the Key Rate to 7.25% by the middle of next year.”