Central Bank of Russia keeps one eye on the ruble

The Central Bank of Russia (CBR) left interest rates on hold today but signalled that it was ready to tighten policy if there were signs that the recent fall in the ruble was fuelling inflation pressures. We don’t think that interest rate hikes are imminent, but at the very least today’s statement does reinforce our view that there is little room for policy to be loosened despite the continued weakness of growth. We expect the one-week repo rate to remain unchanged throughout 2014.