The decision by the US to impose sanctions on newly-issued Russian sovereign debt has caused a sell-off in the ruble and sovereign bonds today, but we think any further market fallout or the macroeconomic impact will be limited unless sanctions are extended to all sovereign debt or Russia retaliates aggressively. Even so, we think this argues in favour of a larger 50bp rate hike, to 5.00%, at next week’s CBR meeting.
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