WOOD Flash – Russia macro: CBR surprises to the downside, with a 25bps hike
The Board of Directors at the CBR decided to raise the key rate by 25bps to 6.75% at its meeting on Friday (10 September). The decision was below the 50bps rise that we and the consensus were expecting. However, consistent with our expectations, the tone at the statement was softened further, for the second meeting in a row, which reinforces our view that the tightening cycle has almost run its course and that the upside room is limited to one or two further 25bps rate hikes at the upcoming meetings. The bank has raised the key rate by a cumulative 250bps so far this year and we expect remaining upside potential of up to 50bps, to 7.25%, this year, followed by moderate scope for easing to 6.50% by end-2022E, with upside coming from tapering implementation in the US.
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