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Macro week ahead


This week, the CBR’s board of directors is likely to meet to discuss monetary policy (15 July is the latest possible date). Also to watch in Russia this week are car sales in June, the weekly CPI reading and the first external trade data for June. In the CEEMEA universe (outside Russia), the most attention is set to be on CA data in Turkey as well as CPI reports for June in Hungary and the Czech Republic.

The next CBR monetary policy meeting is this week’s main economic event in CEEMEA, in our view. We believe that the first meeting chaired by Elvira Nabiullina will bring the first 25bp cut across the board on recent macroeconomic data. The economy’s dynamics significantly deteriorated in May (which can only be partly explained by the unfavourable calendar factor), the first sets of data for June confirmed the economy’s softness (car sales this week could print another doubledigit decline), growth in headline CPI in June declined below the 7.0% threshold.

Among other data in Russia, the weekly CPI report on Wednesday will likely confirm that despite hikes in regulated tariffs being stronger than last year, YoY disinflation continued in Russia.

In the CEEMEA space, the market will pay attention to the Turkish CA balance for May, especially given current pressure on TRY and the local bond market. The deficit is set to narrow vs. April’s reading, but on a T12M basis it is set to continue to widen, highlighting structural problems with Turkey’s external balances, which, in our opinion, can only be addressed by tight monetary policy and a weaker lira. Thus, the report is set to highlight that pressure on Turkish assets is likely to persist (although, the interest rate level on long-term bonds is already looking to be close to an attractive one). Inflation in the Czech Rep. and Hungary will likely remain soft, confirming the easing bias in monetary policy.

Maxim Oreshkin, Daria Isakova
VTB Capital analyst


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