The CBR raised policy rates 150bp last Friday, but ruled to leave the intervention mechanism and FX refinancing facilities unchanged.
The CBR’s decision last Friday was a bold move to calm the FX market and address concerns over rising inflation expectations. We are concerned though, that the recent bout of capital outflow might not necessarily be highly sensitive to rates and it could well be that pressures on the currency are not fully behind us. We think the next policy action in this regards might involve changing the intervention policy as well as expanding and fine tuning USD refinancing vehicles. As for rates, in the base case scenario the CBR is likely to remain on hold before starting an easing cycle in the middle of next year.
Daria Isakova, Vladimir Kolychev
VTB Capital analyst
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