Russian central bank takes hawkish turn, but cuts on the cards

The hawkish statement by the Central Bank of Russia that accompanied today’s decision to leave the policy rate on hold has prompted us to revise up our end-year interest rate forecast (to 8.25%, previously 7.50%). Nonetheless, we still think inflation will fall towards the Bank’s target in the coming months, allowing larger interest rate cuts than most expect both this year and next.

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