CBR Chairman Sergey Ignatiev is considering the possibility of cutting key rates, once the headline CPI starts declining (he expects it to happen in coming months).
The CBR’s recent comment is in line with our forecast of impending easing in monetary policy. We still expect the initial easing step in April, as the headline CPI is set to make a first downward move in March, while the economic picture is unlikely to improve in the near term, in our view (to recap, IP contracted in January for the first time since October 2009). It is worth mentioning that, if the other January data (due on 19-21 February) is disappointing, the chances of a rate cut in March would increase. For FY13, we see a 75bp cut in key rates.
Maxim Oreshkin, Daria Isakova
VTB Capital analyst
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