Macroeconomic Forecast Russia

With liquidity conditions in the Russian banking system recently seizing up, the Bank of Russia sought to ease interbank liquidity tightness by lowering the repo rate by 25 basis points (bps) to 5.25% on September 14, while raising the deposit rate by the same amount to 3.75%. While this ties in nicely with our earlier call for no further monetary tightening and a 25bps policy rate cut to 8.00% in early 2012, we previously noted that the bank's move did not constitute the beginning of a full-blown monetary easing cycle. We therefore do not expect the key policy rate to be cut before 2012.

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