In Russia, the only interesting release is the weekly CPI reading, which is likely to bring further evidence of headline disinflation due to the favourable base effect in food prices. The headline CPI for July as a whole is set to slide very close to the upper boundary of the CBR’s target range (to 6.3-6.4% YoY).
In Turkey, CBRT Governor Erdem Basci promised to deliver a ‘measured step’, which is typically associated with a 50bp move. However, such a move up only in the upper boundary of the interest rate corridor would disappoint the market, which is already expecting an increase of at least 75bp. For a policy change to have an effect on the FX market, a longer lasting, bolder step is needed. That is why we expect a 100-150bp hike in the upper boundary, bringing it to 7.5-8.0%. All other rates are to be left unchanged, in our view.
Hungary is likely to continue its easing cycle, with another 25bp rate cut, as the economy/inflation mix allows the MPC to act more.