Analysts at TDS, expect the Central Bank of Russia (CBR) to continue its easing cycle and to cut by 25bps at the board meeting next Friday.

Key Quotes:

“The market has pretty much fully priced in a 25bps cut so we expect little response from USDRUB. If the CBR surprises the market with a 50bps cut we could see some move up in USDRUB of about 0.3-0.5%.”

“We think the CBR will stick with its recent cautious stance and cut the Key Rate by 25bps to 7.25%. This is a revision to our previous forecast where we expected the next cut to come in September. Our revised forecast is in line with the almost unanimous consensus.”

“After next Friday's cut we expect two more cuts: at the September and December meetings. We expect only one cut next year, in March, bringing the Key Rate down to 6.5%. Given that the 4% target should have been more or less reached by then, this would put the real policy rate in the middle of the 2-3% range which the CBR deems to be neutral.”