Today, the CBR is due to decide on key interest rates.
December’s comment and recent statements from top officials have sent a clear signal that there is to be no change of rates in January. The main question now is, will there be a signal that the pause is set to continue and, if so, for how long? As economic growth remains weak and the underlying inflation trend is still downward, we expect the CBR to signal that the rates level is “appropriate for the near future” and so assume no policy moves, at least in February. January’s increase in headline CPI will be called technical and temporary, while the overall tone will become more dovish, in our view. As for the medium-term outlook, we continue to expect explicit monetary policy easing steps from the CBR (rate cuts and/or more active medium term lending linked to the repo rate) in late 1Q13 – early 2Q13.
Maxim Oreshkin, Daria Isakova
VTB Capital analyst
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