Rates Weekly - November 19, 2019

> Ruble liquidity: O/N rates to remain more or less flat despite upcoming tax deadline. The O/N interbank rate has remained elevated at around 6.4%, as the liquidity inflow from budget spending has stalled. For the upcoming seven days, we expect O/N rates to be more or less flat, though they will likely drop a bit late this week due to excess liquidity resulting from CBR operations, while early next week they could rise because of taxes, although not by much, as this month's tax payments are relatively small. > OFZs and rates: Nabiullina speech in Duma, weekly inflation data tomorrow in focus. Tomorrow, CBR Governor Elvira Nabiullina will present the CBR's monetary policy guidelines for 2020-22 to the Duma. We hope to get more clarity on the CBR's view on the nature of recent disinflation, by how much and how fast it can cut the key rate further and what its current assessment of the neutral key rate is. In our view, rate markets are pricing in a 25 bp cut in December, followed by another 25 bp cut in 1Q20, with a low probability of more cuts thereafter. If Nabiullina signals softer policy tomorrow, this will spur offers in rates. The latest weekly inflation data will also come out tomorrow.