CBR key rate likely to fall to 10% in December 2015

Together with the stabilising oil price, the RUB's volatility is also reduced and additional room is provided for resuming monetary easing, which has been badly missed by businesses and consumers among the current economic recession.

The latest statement is seen released after September's decision being cautiously dovish despite unchanged rates as Russia's economic prospects look weak. Yet, cautiously trying to justify its latest 'on hold' decision, the CBR did not clear enough anchors to the markets. 

The CBR left an open question, are inflation expectations more important in the CBR's decision making than economic cooling? This was a change from its previous communications, which enhanced the importance of economic risks and less inflation. 

"However, political pressure on the CBR to cut rates has increased and the central bank's attention will be drawn away from inflation expectations at its next meetings. We expect the key rate to fall to 10% this year and to 7% in late 2016", says Danske Bank.