Today, the CBR is due to decide on key interest rates.
The meeting will be the last chaired by Governor Sergei Ignatiev: with repo rates left unchanged he would keep his anti-inflation image. Although the regulator is close to broadening easing, the almost two-year high in headline CPI is set to prevent the CBR from making the next step this time. We will likely see only medium-term rates cut, similar to the previous two meetings, although the importance of such a step for the money market would increase this time. At July’s meeting, we expect policymakers (chaired by Governor Elvira Nabiullina) will have no choice but to cut short-term repo rates, as June will bring sharp headline disinflation and also given the large negative surprise from May’s economic report.
Maxim Oreshkin, Daria Isakova
VTB Capital analyst
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