CBR likely to cut key rate by 50bp

The central bank of Russia, CBR will be announcing its policy rate decision tomorrow, and there will be a press conference after the rate announcement.

There are geo-political tensions around the country , and Russia recently introduced sanctions against food imports from Turkey as a response to Russian warplane being shot down by Turkish armed forces in November 2015.


"We expect the key rate to be lowered by 50bp to 10.50%, while consensus recently changed its view to 'no change'", says Danske Bank in a research note.

The central bank expects the impact of this sanctions to be limited on the Russian inflation. It expects to encounter a 0.2-0.4 pp increase in inflation and even the CPI medium-term forecasts to have minimal impacts.

The CBR expects the impact of the sanctions on inflation to be limited. It expects it to account for a 0.2-0.4pp increase in inflation and to have an insignificant impact on the mid-run CPI forecast.