Russia's inflation is edging lower on account of base effects, but the inflation trend is nowhere near the CBR target of 4%. The CBR will likely remains on hold at its next MPC meeting on 31 January, but as base effects bring inflation below 10%, we expect the CBR to eventually cut rates, possibly at its mid-March meeting.

The centrak bank is likely to cut rates in 50bp increments with cumulative CBR cuts likely reaching 200bp through 2016, with some intermittent pauses. Markets however had been pricing in a 25bp rate cut at the January meeting, which are now largely eliminated, and the forward curve has shifted higher, particularly over the next year.

"We do not expect an on-hold decision by the CBR to lead to marked repricing in front-end local rates. Furthermore, it is unlikely to support the currency given the negative oil/macro backdrop." notes Barclays in a research note.