RUB at a new sustainable level. The first month of the summer was hit by a broad
Inflation risks are to the downside. June marked the beginning of
Budget under pressure. Weaker nominal GDP growth, lower privatisation revenues and higher VAT repayments are to result in a transfer to the Reserve Fund of just near RUB 65bn, limiting MinFin’s FX purchases. At the same time, the deficit is likely to be only 0.5% of GDP.
Putin unveils his growth action plan. Speaking at SPIEF, Putin announced plans to support growth, including a cap on regulated tariffs and more infrastructure spending. We have lowered our inflation forecast for 2014–15 and kept our 2013 GDP forecast unchanged at 2.4% YoY.
Month ahead. We expect an across the board 25bp cut in policy rates at Nabiullina’s debut CBR meeting. June’s economic data will likely show a slight rebound (technical in nature) from May’s depths.