CBR to decide policy

In Russia, it is commonly expected the Bank of Russia (CBR) to slow the pace of easing and lower its policy rate by 50bp to 11% on Friday MPC meeting. 

At the most recent meeting, the CBR signaled 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. 

"While inflation remains high, it is likely to experience a marked decline towards 7.5% by mid-2016", says Barclays. 

Meanwhile, the growth trajectory remains depressing as June real sector data confirm the recession. In addition, the recent decline in oil may give some incentive for RUB weakness to partially offset the unfavourable impact on fiscal balance.