Russia: 25bp cut to 8.25% is widely expected by CBR – Danske Bank

Analysts at Danske Bank, point out that the central bank (CBR) of Russia will release its decision today and while a 25bp cut to 8.25% is widely expected (Bloomberg consensus and Danske Bank), there is a possibility that the CBR could do more and deliver a 50bp cut, or do nothing and keep the key rate unchanged.

Key Quotes

“However, a cautious cut would be well justified, in our view, given that inflation has hit its post-Soviet lowest at 3.0% y/y, falling far below the CBR's target of 4.0% y/y. On the other hand, inflation expectations remain sticky, declining marginally. The CBR has been cautiously hawkish in its inflation comments recently and are not concerned about the high real rates. In its Friday's statement, we expect the CBR to praise economic development, enhancing the need for firmer CPI, anchoring around the target in the long run. We expect the key rate to end up at 8.00% by end-2017.”