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Key event is CBR’s monetary policy decision

 
06.11.2012

This week's macro releases include the full-month report on consumer price index growth in October and the regular meeting of the CBR’s Board of Directors on monetary policy. We also expect the Services PMI, weekly CPI, and external trade balance for September, as well as customs’ preliminary statistics on non-CIS imports in October.

This week starts with the CPI release for October (due 6-7 November), which is the last important report to be taken into account before the CBR’s key rates decision (scheduled for 9 November). Given that the surprising deceleration in weekly CPI in late October might be explained by one-off deflation in some services, we see the full-month reading reaching 0.6-0.7% MoM and 6.7-6.8% YoY. Key attention should be paid to the underlying inflation trend. The CBR’s decision is a close call: recent economic data has been mixed to negative and lending growth has slowed down, but inflation continued to accelerate well above updated the CBR's target. We see a high probability of there being a 25bp increase in deposit and auction-repo rates only, for the last time in this cycle, and a signal for pause from regulator. We might also see a downward move in the FX swap rate as a measure aimed at easing liquidity conditions on the market.

Among the other important things to watch this week:

Services PMI today, to give a first estimate of how the sector performed in October.

Weekly CPI on Wednesday, which will show how sustainable the recent deceleration in daily price growth is.

On 9 November, the CBR is due to release the external trade balance for September, while early this week the federal customs services are likely to publish the first estimate of non-CIS imports for October. Watch out for whether the weak investment goods import data in September was repeated in October. 

Maxim Oreshkin, Daria Isakova
VTB Capital analyst

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