Since October 2015, Central bank of Russia has kept the interest rate steady at 11%. More complete data provided further evidence that the recession bottomed out in Q2 2015 and began to show signs of stabilization in Q3. GDP decreased 4.1% year-on-year in Q3 following the 4.6% plunge in Q2, which marked the worst contraction in six years.

The main elements behind Q3's relative improvement were a good performance in the agricultural sector and stabilization in the industrial sector. Further signs of improvement in the industrial sector were observed in Q4: the pace of contraction in industrial production softened for the sixth consecutive month in November.

Heading into 2016, business activity in the Russian manufacturing and services sectors was disappointing as both sectors' PMIs fell in December; this signals that activity was poor at the end of year. Structural weakness, coupled with international sanctions and lower oil prices caused the economy to collapse last year. Another year of recession is expected for 2016 when GDP is projected to contract 0.2%.

Although less severe than in 2015, the recession will also reflect weak economic fundamentals and low oil prices. Negative risks to the outlook could arise from growing geopolitical tensions in Ukraine, Turkey and the Middle East.

JP Morgan expects the first 50bp at June meeting and a total of 150bp during 2016.