The key event this week is the CBR’s decision on monetary policy. In the past month, the CPI’s YoY growth has accelerated from 4.3% to 5.6%, while consumer demand and lending growth remained robust. First Deputy Chairman of the CBR Alexey Ulyukaev has highlighted the inflation risks in Russia’s economy and pointed to the possibility of a rate hike. In this environment, we expect no base rate change in August, but more hawkish rhetoric in the commentary pointing to a first rate hike in September.
Among the other important things to watch this week:
The weekly CPI release on Wednesday, which we expect to show that the acceleration in the headline YoY growth is continuing, albeit at a slower pace than in July.
Light vehicle and car sales for July on Thursday, that will give a first estimate as to whether the momentum in consumer demand growth has remained strong or not.
External trade data from the CBR for June on Friday, which we forecast will show a significant decline in the trade balance to USD 15.0bn (from USD 17.4bn in June) on the back of weaker oil prices. The Urals price has rebounded recently and is helping export values in 3Q12, but the June data will give a rough estimate as to where exports might be if oil prices were to return to a sub-USD100/bbl level.