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4 May 2016
CBR expected to ease further in H2 – Rabobank
Analyst at Rabobank Piotr Matys sees the Russian central bank resuming its easing cycle in the second half of the year.
Key Quotes
“Despite the sharp deceleration in inflation, Russia’s monetary policy makers led by Governor Nabiullina are not convinced that inflationary risks have sufficiently diminished to resume the easing cycle paused in September 2015”.
“The Bank of Russia may have to wait until the second half of the year until it cuts the key rate, which was left unchanged at 11% in April due to risk that selling pressure on the rouble may resurface”.
“Our baseline scenario assumes that oil may reverse some of its year-to-date gains in the coming months. A correction in Brent crude would trigger profit taking in the rouble, which has been the best performing currency amongst its CEEMEA peers so far this year – mainly due to rising oil prices”.
“The rouble will also be vulnerable to a potential sudden rise in speculations that the probability of a Fed hike in June is markedly higher than currently priced in. In our view the markets are too dovish seeing less than 20% chance that the Fed could tighten monetary policy at the end of H1”.
Key Quotes
“Despite the sharp deceleration in inflation, Russia’s monetary policy makers led by Governor Nabiullina are not convinced that inflationary risks have sufficiently diminished to resume the easing cycle paused in September 2015”.
“The Bank of Russia may have to wait until the second half of the year until it cuts the key rate, which was left unchanged at 11% in April due to risk that selling pressure on the rouble may resurface”.
“Our baseline scenario assumes that oil may reverse some of its year-to-date gains in the coming months. A correction in Brent crude would trigger profit taking in the rouble, which has been the best performing currency amongst its CEEMEA peers so far this year – mainly due to rising oil prices”.
“The rouble will also be vulnerable to a potential sudden rise in speculations that the probability of a Fed hike in June is markedly higher than currently priced in. In our view the markets are too dovish seeing less than 20% chance that the Fed could tighten monetary policy at the end of H1”.