Russian central bank to slow (but not end) easing cycle

Govenor Nabiullina’s hawkish comments at today’s post-meeting press conference are likely to reinforce views in the markets that the central bank’s easing cycle is at an end. For our part, we think the impact of the government’s recently-announced VAT hike for 2019 means the easing cycle will now be slower, but not smaller, than we had previously anticipated. We have also revised our 2018 GDP growth forecast down as a result, but the economy should still perform better than most expect.