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Hawkish CBR closes the door on further easing

Russia’s central bank (CBR) left its key policy rate on hold at 4.25% today and the hawkish message about pro-inflationary risks means that there is no room for further easing. The CBR set the groundwork for a return of interest rates back to a neutral range of 5-6%, but we think that monetary tightening will be extremely gradual and interest rates will remain lower for longer than investors currently assume.

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