Russian inflation decelerates below 6 pct in November, first time since August 2012

Russian inflation decelerated below the 6 percent mark in November, the first time since August 2012. Consumer prices in the month rose 0.4 percent in sequential terms, while the year-on-year rate eased to 5.8 percent. The core rate also dropped further and reached 6.2 percent. This is welcome news for the Bank of Russia as its inflation target is 4 percent for late 2017. The inflation came one step closer to reaching the target level; however, 4 percent target continues to be quite ambitious.

The consumer price data for November did not have any impact on the foreign exchange market, as the Bank of Russia had already explained after its last rate cut in September that it would only lower interest rates further if the inflation target was to be achieved, noted Commerzbank. This approach would be quite advantageous for the Russian ruble. For emerging market currencies, nothing is worse than excessively rapid rate reductions in times when the U.S. Fed is hiking the rates, added Commerzbank.