Vedomosti has published a big interview with Sergey Ignatiev, who has been working as CBR Chairman for eleven years and is to leave his post this June. The key takeaways are as follows.
We also expect headline CPI to decline once it reaches its peak in February and are retaining our forecast for headline CPI at 5.3% eop-2013 (given Brent oil at USD 110/bbl). Ignatiev’s words are once more in line with our view of coming monetary policy easing. To recap, we see the first easing step in April and a 75bp cut in total for FY13.
On the unemployment front, as the January data showed a pick-up in unemployment, that opens the door for monetary policy easing. As far infrastructure spending is concerned, we agree with Ignatiev’s comments, however the key issues in this regard are efficiency and preserving long-term fiscal stability. In order to keep the fiscal rule intact, a main source for infrastructure spending should be found inside the budget. The story about grey capital flows is not a new one. We believe that improvements on this front, coupled with developing an investment climate, will turn Russia’s economic conditions to the better.