CBR rate decision preview

This Thursday (30 April 2015) at 12.30pm CET Russia's central bank (the CBR) will announce its monetary policy decision. During the last meeting on 13 March 2015 the CBR had already signalled that it is ready to cut on slowing inflation as 'the balance of risks is still shifted towards a more significant cooling of the economy'. 

Despite the fact that the CPI levels remain very high, hitting 16.9% y/y in March 2015, and continue to damage the economy through their impact on private consumption, weekly price rises have not exceeded 0.3% and long-run expectations are clearly on the downside. 

On the other hand, economic growth entered negative territory during Q1 15 as fixed investments shrank y/y for the 15th month in a row, retail sales growth y/y has been negative YTD and loans growth has significantly slowed down. 

"We expect a 100bp cut in the key rate to 13% p.a. in line with consensus. We expect the dovish monetary policy to go on pushing the key rate under 10% by end-2015." says Danske Bank in a report on Wednesday.