CBR: a hike and clear signal for aggressive tightening

Russia’s central bank (CBR) unexpectedly hiked its key policy rate by 25bp to 4.50% at today’s meeting in response to the recent surge in inflation and the accompanying communications sent a strong signal that it is prepared for an aggressive tightening cycle. We think that there will a 25bp rate hike in April and June, with additional tightening later this year taking the policy rate to 5.25% by year-end.