FXStreet (Edinburgh) – Paul Fage, Strategist at TD Securities, sees the Russian central bank lowering further its benchmark rate at tomorrow’s meeting.
Key Quotes
“At tomorrow’s meeting of the Board of Directors of the Central Bank of Russia (CBR), we expect the key rate to be cut by 50 bps to 11.0%. This is in line with the consensus”.
“At the June meeting the CBR warned that the potential for easing would be limited in the coming months. This was probably due to the anticipated move up in inflation in July because of tariff hikes. Furthermore, the ruble has weakened since the June meeting, increasing inflationary pressures”.
“So we think that the CBR will cut tomorrow. Indeed the suspension of FX purchases can be seen as paving the way for a cut. However, we think that because of the expected blip up in July inflation and recent ruble weakness, the CBR will moderate the pace of cuts and cut by just 50 bps. But given the increased inflationary risks, we think the risks to our forecast lie more in the direction of them cutting less than 50 bps, rather than more”.
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