Pace of cuts in Russia to slow

In Russia, the Bank of Russia (CBR) to cut its policy rate by 50bp to 11%. At the most recent meeting, the CBR signalled that it will slow the rate of cuts in upcoming meetings and did not rule out possibly remaining on hold depending on the data. 

"The CBR has reasons to continue cutting. Although inflation remains high at 15.3%, most of this is old news from Q1. During Q2, prices increased only a bit more than 1% (4% annualised)", says Barclays. 

Furthermore, the CBR forecasts that inflation will decline to about 7.5% by mid-2016. Thus, forward-looking real rates remain high, and there is further room to cut. 

"The reason for restraint is that utility price hikes in July (average of 7.5%) and recent RUB weakness could put some upward pressure on inflation and possibly negatively influence expectations", added Barclays.