The Central Bank of Russia (CBR) was expected to maintain its stable key rate at today’s meeting. This had been the majority opinion among analysts, including us, until recently, but recently, the majority consensus has changed in favor of a cut of 100 basic points today. This change could be driven by a combination of a weakest economic news, a flattened inflation trajectory – annualized inflation finally shows better dynamics, slowing down to 9.78% year -on -year from May 26 – and possibly, a gradual disregard of favorable scenarios related to a peace treaty, or the elimination of sanctions, which would have provided automatic support to growth, indicates automatic support to growth, indicates automatic support to growth, indicates automatic support to growth, indicates automatic support to growth, indicates automatic support to growth, indicates automatic support to growth, indicates automatic support to growth, indicates automatic support, automatic support to growth, indicates automatic support to growth, indicates automatic support, automatic support to growth, indicates automatic support to growth, indicates automatic support, automatic support to growth, indicates automatic support to growth, indicates automatic support, automatic support to growth, indicates automatic support to growth, indicates automatic support to growth, indicates automatic support to growth, indicates automatic support to the growth, Tatha Ghose, Commerzbank’s currency analyst.
USD/Rub and Eur/Rub will move upwards during the next year
“Even when favorable scenarios are being dismissed, however, the USD/Rub and EUR/RUB change rates remain fixed at low levels that they reached during the last quarter – this lack of reaction probably reflects the ‘artificial’ nature of the Russian change rates. Speaking fundamentally, there is not much justification for the strength of the exchange rate at this time: the price of oil has been established in about $ 10. Low barrel than its previous range of 70-75 per barrel and this has already impacted the income from oil and gas in Russia (which fell 35.4% year-on-year in May).
“Of course, there are always some upward signals: the PMI of services increased in its last reading and retail sales and industrial production accelerated slightly, the latter due to defense spending. But in general, the signs of economic slowdown are much more prominent. CBR itself has been recognizing that this time the Board could consider a broader range of options, which has led some to predict even a cut of 200 basic points. Rat cut is the favorite result of consensus now, even if it is not an consummate.
“In the US Senate and in the EU, more sanctions against Russia are being aligned, not the opposite – the EU is preparing its 18th package of sanctions, which will point to Russian energy and the remaining sources of financing. We anticipate that a rate cut today will not impact the change rates USD/RUB or EUR/RUB, which are ‘technical adjustments’ and recently moved even in response to significant geopolitical developments.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
